If you're travelling on a budget it's worth considering staying on the mainland and 'commuting' in each morning. However, if you have got your mind set on Venice itself then a bed in a hostel works out the most economical. If you're having difficulty finding budget accommodation the Tourist Office are best positioned to point you in the right direction, otherwise you can try the collection of bog standard hotels and pensioni clustered round the train station.
Finding a good mid-range hotel can be something of a lottery; there's plenty of good accommodation out there but Venice's star rating system is based on facilities rather than the overall 'quality' of the hotel. If booking online read previous guests' recommendations and only book a room once you've seen a photo of it. Perennial favourites which won't break the bank include: La Calcina, La Residenza and Agli Alboretti.
If the idea of forking out in excess of € 200 for a night in a two star hotel fills you with dread, then you might want to consider staying in a locanda. The latest addition to Venice's accommodation scene locande are long overdue and represent real value for money. Locande come in all shapes and sizes (from local inns to restored palaces) and you should be able to get a decent room without venturing into triple figures.
At the top end of the market hotels don't come much more sumptuous (or expensive) than the Danieli, which can count Dickens and Proust as past guests, while competition comes from the Cipriani (complete with Olympic swimming pool, tennis courts and a Jacuzzi in every room), and the 15th century Gritti Palace overlooking the Grand Canal.