Which area is best to stay first time visit?
That depends on your interests. Umbria is a large area. Perugia is the most central and largest city, but many people enjoy Orvieto or Assisi. You really need to read a guide book to decide which place(s) appeal to you.
As said, it depends on what you are looking for. Perugia is the largest and most central city, and is a very interesting place to visit on its own; basically it is fine as a base to visit the region. Assisi (very close to Perugia) and Orvieto (in a rather different area) are the most touristy towns.
But you might prefer to stay around the Trasimeno Lake, to experience a bit quieter towns like Gubbio, Todi or Spoleto, or even quieter villages like Trevi, Bettona, Montefalco, or to go off the beaten path choosing totally untouristy alternatives like Città di Castello, Foligno, Narni... Umbria is small but there is a lot to see and there are many different options to approach it.
We spent some time in Umbria, some 4 years ago, and had a lovely visit. Having a car, we found Foligno to be our most ideal base. Easy to get around. We stayed at a very stylish boutique hotel which was a nice short walk to the center of town and great restaurants for our evening meals. This would work well if you had a car.
Thanks Wequeen which hotel was it?
Look at Spoleto also as it has the topography to give views and interaction that perhaps Foligno does not.
Do you want smaller or larger places because in essence the smaller villages give a better taste and a car can take you away whenever required.
I'd like a beautiful small village with great restaurants and gorgeous d views?
"I'd like a beautiful small village with great restaurants and gorgeous d views?"
For these requirements, the best are probably Spello, Trevi or Montefalco. I can't swear about restaurants, though.
Foligno is not a small village (more than 50,000 residents, not few at all for Umbria) and is totally flat, so no particular views.
Ditto on Spello, this hillside town is charming and you can spend days exploring its nooks and crannies. You can also take day trips around Umbria and Tuscany.
Thanks I reserved 4 nights in spoleto and we shall rent a car but it will be nice to be able to walk at night to restaurants and not have to drive. A lot of places were already booked for next year.