Terrazas de Lanzarote turned out to be ideal for the two of us. It is comfortable, very well located about 100 metres from the beach and really close to shops, restaurants, airport and all amenities. Arrecife is a great location for travelling around the many interesting sites in Lanzarote. We used the intercity bus service (about a 10 minute walk to the central station) to get all over the island. Almost everywhere is accesible by buses which are very inexpensive. We hired a car from Payless located 50 metres from Terrazas for one marvellour trip to Mirador Del Rio, the Cesar Manrique Funacion and the caves of Jameos Del Agua. All of these are well worth a visit. For such a small island Lanzarote has so much interesting places. My personal highlight was a visit to Timafaya National Park. To avoid long queues, take an intercity bus to Yaiza, hire a taxi there to take you to the park and prepare to be amazed at the volcanic fields and craters you will see. It is superbly different to any experience (bring a camera - the views are unique). I enjoyed cycling in and around Arrecife - there are really attractive cycle and walking pathways) and you can easily access Puerto Del Carmen and the much more beautiful Puerto Calero a few minutes further down the main road. You can hire bikes locally for €10 a day and stop at the many nice restaurants and bars on your way.
Terrazas turned out to be a great location for a very active holiday with great variety over our 10 days in Lanzarote.