Not sure if anyone else has mentioned it, but there's a brand new Spanish restaurant in Kensington Market, I think it's called Torino. It's on Augusta, between La Palette and Supermarket - look for the orange-fronted building with a silhouetted bull on it. They only opened on December 6, I think, and as of this past week are waiting on their liquor license.
Food is excellent. My friends and I tried the smoked trout with potatoes (wow), steak with gallega chips and an egg (wow), Spanish tortilla (good, but I always associate this dish with a quick and hearty bite in Spain, so it didn't really compare), and quail with sweet potatoes (good, but I'm not a huge fan of quail). Prices average $7, with the steak and quail $10 and $11. Atmosphere is pleasant; lots of wood, enough light to see but dim enough so everyone looks good, more of a College Street than Kensington feeling. Staff is friendly, although we were the only ones eating then.