I make regular trips up and down the N2 between the Winelands and Grahamstown, and almost always use this as an excuse to overnight in Knysna, and eat at Firefly Eating House. I have my favourite spots, but do always take the opportunity to try new accommodations.
This Friday I spent the night at Bridgewater B&B, which is a three star establishment located on the N2 with a good view across the Knysna Lagoon. It truly is lovely. Comfortable but rather small rooms, a substantial lounge and dining area, gardens, pool and friendly service. If you need complete quiet to sleep this may not work, but I was very happy with my double glazed windows and the gentle drone of traffic. Offering excellent value for money, well located, I do recommend the owner managed Bridgewater B&B. http://www.bridge-water.co.za/
View across the N2 towards the Knysna Lagoon.