We stayed at the Pestana Carlton in September, and had a lovely time. We went B&B and ate out every night. We had lunch a couple of times at the pool bar, and dinner at the attached restaurant once, and the attached pub on the first night. We also went to the Indian restaurant over the road which was nice. Other times we went into the old town or walked in the opposite direction. There are lots of places to eat whichever way you go, and we didn't have a bad meal all week. I can't remember how much the meals cost, but they weren't extortionate.
It's a reasonable walk down to the old town and back, but we managed it and we're not that fit! Sometimes we got a taxi back, which I think was about 8 euros, but there are also buses.
I would definitely stay at the Carlton again, however be aware that the Pestana group run their own owners club and you will probably get a card through your door inviting you for a free drink so they can invite you to a sales pitch. If you're not interested just ignore it. We went and it was interesting enough, but there was no hard sell.
I'd also request or book a room with either a sea or side view...we were on the side so has a view down to the old town and harbour straight ahead, sea to the right and the street to the left, which was nice. We were also on quite a high floor which reduced some of the street noise.
Madeira is lovely and we had a great time, it's the first holiday I've come back from feeling genuinely relaxed and like I'd been away for longer than a week.