La Paz has better restaurants than its reputation suggests. The Sopocachi neighbourhood is the best area to look — a grid of streets between Plaza Avaroa and Avenida 6 de Agosto with everything from cheap set-lunch places to international restaurants that would hold their own in bigger cities. The Mercado Lanza and other food markets are the places to eat like a local: hot soup, salteñas (Bolivia's answer to an empanada), and the filling two-course almuerzo that most market stalls serve until mid-afternoon for around 15 bolivianos.
A note on altitude and appetite: the thin air can suppress hunger for the first day or two. Eat small amounts, stay hydrated, and avoid heavy meals in the first 24 hours.