My father once sagely pointed out that, having never stayed in a Montalcino hotel, I am scarcely in a position to recommend them and of course he is right. I must also admit that I know the proprietors since everyone knows everyone in Montalcino. I will add that I have only heard good things about the following establishments from people who have stayed there.
Provisos made, here are some places to stay within the city walls, something to seriously consider if you are planning to attend Benvenuto Brunello and may be consuming more wine than is compatible with safe driving.
Another wonderful B&B option is Porta Castellana , hidden away in the backstreets of town where many Montalcinesi never set foot. There are only two rooms so it is extremely personal, and in the warmer months you can have breakfast outside overlooking the Val D'Orcia. Free parking is provided.
Locanda Franci have beautiful rooms right next to the Fortress, along with the super-central Barlanzone and particularly their top floor, well-named Bellavista apartment.
It may be booked already, but do take note of this new entry; a lovely cosy apartment with a terrace with extraordinary views, details here.