Stayed at Malabia about a year ago. The breakfast was standard but plentiful, with fresh juice and medialunas (little croissants) plus some fixings and of course coffee. They also offer coffee/cookies later in the afternoon, which is nice after a day of sightseeing (read: shopping).
I wouldn't stay there again, though: the place used to be a nunnery and the rooms are small, plain, all facing the echo-y courtyard and with unacceptably small bathrooms (too small for the sink, which is at the foot of the bed). I know it's off the Chowhound theme, but important in making your decision, I think.
Though it's a big hotel, the Sofitel in Puerto Madero had an amazingly delicious breakfast buffet. Lots of local cheeses, locally made jams, local produce, fresh bread and eggs, kick-ass coffee, chic and relaxing setting, all included in the price. It's not a B+B, nor is it in Palermo, but I'd still consider it.
Posada Palermo has excellent breakfasts, but I don't know if they meet your criteria for "local flair". Every breakfast starts with a crustless, grilled ham and cheese sandwich and two eggs, any style (I always ordered poached, and cut my sandwich into little sticks for dipping into the yolks). There are also baskets of pastries and bread, ramekins of different jams, nut pastes, and dulce de leche; homemade yogurt, fresh orange juice, coffee, tea, alfajores, and a big basket of fruit.
Try Caseron Porteno. It's a small b&b. well located in the border between Palermo and Belgrano, near everything. It was a tango flavor to it. I am not sure how the food is there but.......you'll be close to tons of great restaurants and places to eat and this will have a more homey feeling.
The owners are a young couple who dance tango, very very friendly.
You will be close to Bar Uriarte, Dominga, Bar 6, Olsen, Social Paraiso (a gem few people know about!), and so many others..............
I actually stayed at Malabia House and didn't like it very much -- aside from the location, there's not a whole lot too it. I have read great things about Home and BoBo and a few others and I think as long as your location is Palermo, you'll be close to tons of great restaurants and bars - like Casa Cruz, Olsen, Bar 6, Mott, La Cabrera.
As for estancias - we stayed at a totally spectacular Estancia with wonderful food called Estancia El Colibri in Cordoba. I highly recommend.
I actually don't know any B&Bs here that offer food at all (other than coffee and pastries for breakfast), let alone with flair. Friends regularly stay at places like Malabia House and Posadas de Palermo and highly recommend them both. There are also some quite inexpensive hotels like the Art Hotel (not the Art Suites, they're neighboring luxury hotel) and the Juncal Palace - both in Barrio Norte on the border between Recoleta and Palermo. All of the above are convenient to tons of good restaurants.