The entrance to Kunga Guest House in McLeod Ganj is also Nick's Italian Kitchen. Located near the edge of town, the bright and clean guest house is a lovely place to stay.
If you are hungry though, you need not be a guest to enjoy Nick's.
While I cannot speak to the quality of their Italian food (my friend who had been staying at Kunga for the past month assured me it was good), the traditional Tibetan dishes were delicious.
Pillowy momo - Tibetan dumplings - were my favorite. Either fried or in soup, they were always satisfying. And I highly recommend the classic Tibetan brown bread for breakfast with a bit of egg or jam.
Oh and the view? Well you can't complain about the Himalayas, now can you?