Ocotlán [1] has at least two good restaurants. For relaxation, take a seat at the airy plaza-view veranda of the 
Restaurant Celebración (cell 044-951/544-4254, 7 a.m.–10 p.m. daily, $3–10), on the upstairs floor of the Plaza las Portales, on the east side of the central plaza. Although welcoming owner Jorge Guzman serves from a very recognizable à la carte menu of Mexican country breakfast, lunch, and supper choices, his afternoon four-course comida (soup, rice, entrée, and dessert, $4–6) is what keeps most of their local customers returning day after day.
Alternatively, you can usually free yourself of the Friday downtown crowd at the rustic-chic La Cabaña (tel. 951/571-0201, 8 a.m.–7 p.m. daily, $3–8), an open-air palapa restaurant by the gasolinera on the highway, at the north, Oaxaca, edge of town.
If you decide to linger overnight in Ocotlán [1], the newish, clean, and modern Hotel Rey David (16 de Septiembre 248, tel. 951/571-1248, $20 s or d in one bed, $30 d or t in two beds) can accommodate you. The hotel offers about 20 comfortable, attractively decorated rooms. Find it on the south-side Highway 175 ingress-egress avenue, Avenida 16 de Septiembre, where it runs east–west, about three blocks east of the market and central plaza.
Links:
[1] http://www.moon.com/destinations/oaxaca/oaxaca-valley/south-crafts-route/ocotlan