Ok, so the story gets weirder.
I emailed them back, and accepted the 209 rate before the date they stipulated.
A day later got a confirmation email about change to the booking at the new rate (209/night + tax), same original 1 bedroom suite.
Now (3 days later!) I get a cancellation email out of the blue!
Not cool.
Can't find any phone number for booking.com - in the cancellation they refer to the hotel phone number.
Emailed them back to see what's up with cancelling with a rate that they offered me explicitly, but I don't have high hopes for booking.com customer service.