Sherbourne & Shuter
The area around Dundas between Church and Jarvis has recently seen some signs of life, although I haven't sampled enough to have a firm opinion. Smokin' Bones just opened at the corner of Dundas and Dalhousie (that's Dal-hoosie if you're from the hood); Smoke's Poutinerie is at Dundas and George; and Pi-Tom's Thai Cuisine just opened a branch on Jarvis, north of the Grand hotel: http://www.pi-tom.com/
For good cheap breakfast, the George Street Diner is at George and Richmond, a few blocks south of Moss Park.
Being from the neighbourhood, my first piece of advice is go to DineSafe before you go to the restaurant. It's just a sad fact of life in the hood. (Moderators, please don't vaporize. They'll need that info.)
Sherbourne itself is a weird dead zone. You'll find you have to go a block east or west
To the east, I'll conditionally 2nd Sukho Thai. They're very hit and miss, but when they're good they're exceptional. No liquor license. At Parliament & Shuter, Peking Express does chop suey house Chinese. They're super cheap, super fast, and super clean. Take-out and delivery only. Though not the best, for indie pizza and wings there's Peter's Cajun Creole at Parliament & Queen. Delivery & dine in. Beer & wine. Next door to that is Peter's Corner for greasy spoon food with some weirdly upscale items. Beer and wine. For pub grub, you could try the Richmond Rogue at Sherbourne & Richmond.
217 Parliament St, Toronto, ON M5A, CA
274 Parliament St, Toronto, ON M5A, CA
Peter's Cajun Creole Pizza
415 Parliament Street, Toronto, ON M5A2Z4, CA
284 Richmond St E, Toronto, ON M5A1P4, CA
I used to live at Dundas & Sherbourne in my University days and liked George's Chicken at Dundas & Pembroke. Nothing fancy, just take out chicken & fries (and assorted other things). There's no seating but a counter if you want to stand and eat there. I believe they still deliver for free if your order is > $10.
The neighbourhood is still pretty sketchy, but even in my younger single days I was never hassled.
George's Deli & Bbq
254 Dundas St E, Toronto, ON M5A1Z6, CA