Hey there, I live in San Telmo. It is cheap, and I think it is safe even though everyone says otherwise. I walk around here at all hours of the day, night, early morning ;O) and have never had an issue. But I am not a real scared-of-everything person anyway so...
The only complaint I have about the area is the garbage problem. It seems to be worse in this 'hood than in others...? I haven't seen as much garbage in other areas of the city.
There are a few supermercados in the area for groceries, though I think that is one feature that is lacking.
But you can stop by daily at the many verdurarias and little shops for your groceries.
For eating out there is not too much diversity in styles of food, though there are lots of restaurants.
To get something other than the 4 P's (LOL pizza, pasta, peruano & parilla) you will nee to venture out a bit.
Overall I enjoy it here, not yuppie or anything, some tourists esp on Sunday with the Feria.
There are many fun and unpretentious bars and boliches around. It is a lively area for that. A different feel than the more sanitized and upscale Palermo. People are more dressed down when they go out, like it is their living room since perhaps they live in the neighborhood. I like Palermo too, so I suppose it depends on what you are looking for.
Suerte!
*eta: I arrived here at the beginning of the 'national vacations' here hahaha and leave 1 March. So when you arrive I think the area will be more busy and lively. A lot of restos/bars/shops were closed when I arrived and are just now opening up. Perhaps I will have a different impression of San Telmo as the end of vacaciones comes closer. I will come back to BsAs though at the end of 2011 and would not hesitate to come back to San Telmo.