I'm not sure there is much within walking distance of the Sheraton on Harbor Dr. except perhaps the hotel dining room. However, with a car you've got options.
Cafe 222 at 2nd and Island downtown. Hands down the best waffles in the city, particularly the pumpkin waffle. Service from 7 AM - 1:45 PM. Expect to wait on weekends, the place is small and popular.
Kitty corner from the Old Town Transit Center is Perry's Breakfast Cafe. This is an old converted Sambo's restaurant and they didn't do much to the interior when they took over. Think Jetson's retro for interior. Frittatas are humongous and pretty good as are the pancake and egg dishes. There is also a complete menu of Mexican breakfast specialites. Hash browns are stellar, buttery on the inside, crackly on the outside. Coffee is good. Service from 6 am to 2 pm. Expect to wait, but they turn the tables quickly. Sort of quasi truck stop like, but pretty good food for not a lot of $$$
Any of the Original Pancake Houses are good, but the one in Kearny Mesa on Convoy St. is especially good.
Cantina Panaderia in Pacific Beach on Feldspar a 1/2 block west of Cass is good too. Excellent coffee here.
Back in downtown the new breakfast darling has been Richard Walker's Pancake House. Whimsical menu, long lines, harried staff. My breakfast there wasn't particularly great, though I've been told to try it again as things have begun to settle in. The reviews were way better than my experience, but I would recommend trying it, especially if you can go during the week, and forming your own opinion.
I had a delightful breakfast at JSix (6th and J st.) last year, but that was, well, 18 months ago and they've changed chefs at least once since then. So take this one with a big grain of salt.
A lot of people like Rancho's, or Mi Rancho's, for Mexican breakfasts. Personally, I think Rancho's serves some of the worst Mexican food in the city. But if you're going to be in the Ocean Beach area, a better choice is Ortega's on Newport Ave. between Sunset Cliffs and Cable, or even their sister location at Niagra and Bacon.
San Diego may not be a fine dining hot spot, but few places do breakfast better.
If you go to Richard Walker's, don't order the crepes or potato pancakes. I can't vouch for the pancakes or waffles, but their crepes were too "spongy" and potato pancakes flat and tasteless. I kept fiddling around with the sour cream, applesauce, salt and pepper, trying to "liven" the pancakes up to no avail.
Other breakfast places:
Terra in Hillcrest
Hash House a Go Go in Hillcrest (expect a TON of food, quality is pretty good)
Ricky's in Mission Valley for Dutch apple pancakes and pretty good 1950's style diner breakfast (corned beef hash, eggs, hash browns, etc)
Mission Cup Cafe in La Jolla (sister to Cantina Panaderia)
The Cottage in La Jolla
Oh, thank god. I am glad to see I'm not the only one that had a less than ideal experience at Richard Walker's. One of the items we had was the pecan waffle. The waffle itself wasn't too bad, but there was a very distinct and unpleasant after tastes to it. My two eggs arrived literally swimming in grease and were lost on the 10" white plate.........and they were about the only thing on the plate.