Kensington vs Bayswater vs Paddington??

Based on your preferences I'd suggest you look around a bit more - Kensington and Notting Hill are both good residential areas, but it does depend a bit on exactly where in those areas you are.

Paddington and Bayswayer (to a degree) are mainly cheap smaller hotels, and IMO rather run down. Not especially central and not close to shops or good restaurants. I wouldn't dismiss them entirely, but there are better options.

There's no need to be close to Paddington. If you're thinking about travel from Heathrow, tube and Elizabeth Line are cheaper than Heathrow Express and give you a wider range of locations to stay in.

Have you looked at Marylebone or Bloomsbury? They are both lovely central residential areas.

No to Paddington. We stayed there for one night on a return from Paris via Eurostar and wanted to be near Paddington station for a next day departure out of Heathrow. Just no! Kensington or Notting HIll...yes!

Thank you, Simon and KD! This is helpful information and confirms some of my suspicions. I will take a peek at Marylebone and Bloomsbury as well.

Good luck finding the area you will enjoy. We always stay in Kensington and like it very much.
It has a nice neighborhood feel and good shops, food markets.

You might also consider areas like South Kensington, Knightsbridge and even Earls Court..

The Underground (Tube) is extensive and you don't need to be near one particular train station unless you have an early train out of town.

If you are travelling in October the Heathrow Express will be cheaper than the Elizabeth Line (not the other way round) if you buy an early bird ticket on HEx, valid on any train that day. Even HEx early bird plus a tube fare to anywhere in Zone 1 is cheaper than the Elizabeth Line.

I recently stayed at the Darlington Hyde Park, which is in Sussex Gardens near Paddington. I found the area to be quite nice, with easy access to everything we needed. Loads of restaurants and a very adequate pub two blocks away. I'm not one for shopping, so I can't speak to that.
I'm also attaching a link to a recent discussion of Kensington vs. Little Venice. Maybe the OP there can hook you up with the flat she found in Little Venice.
https://community.ricksteves.com/travel-forum/england/little-venice-or-south-kensington-first-time-london
Bottom line, I'm not sure you can go far wrong if you're within a couple blocks of a tube station. I would choose the property that best suits your needs and tastes.
Have a great trip!