When I went in November '09 to see the Flames play, we stayed at the Cosmopolitan Hotel which is just off of Yonge. Neat little arty hotel with suites, and fairly inexpensive. There was a great neighbourhood pub on the same sidestreet, which was almost like an alleyway. It was a fairly easy walk to the ACC/Skydome area, but as mentioned already, if you're near a subway station you're golden.
Yonge is a pretty happening street, so you'll find no shortage of places to eat and drink before and after.
Someone also mentioned the KitKat Italian place - I second their recommendation. It is more in the theatre district, which is very close to SkyDome. If you're there for more than the UFC night, you should check out Second City (near KitKat and Skydome). it is a comedy club that has spawned many of Canada's comedians, and also SCTV. Good sketch comedy and on weekends they do improv afterwards for free (or at least they did when I was there).
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