Hotel Lakshmi opposite Coonoor Bus Stand/ near Railway station serves the best South Indian food in coonoor. Also try Taj Garden retreat at Upper Coonoor. The restaurant at MGM Hillworth Resorts on Mount Pleasant is worth visiting for a great ambience and good food. And not to forget Cafe Coffe Day on Upper Church Road on the way to Sim's Park. Kwality hotel near the Taj serves good Mughlai food.
If you are OK with street food,as most seasoned travelers are, you might like to try Ramakrishnan's cart opposite Sim's Park - just where Cornwall Road starts. His Potato Bondas, Bajjis, Vadais and Samosas are delicious and are really inexpensive. He has a kind of production time table and its best to eat what he has just made.
There is Clasic Snacks Bar opp to More Supper Market they have excellent Veg Puffs and Snaks in the Morning. A must if you are fond of road side food.