I stayed here and it was a great hotel.
http://www.987-praguehotel.com/
It's just back from Wenceslas Square but in a nice quiet place with some great and much cheaper little bistros and a pizza place near it (round the tourist areas it is a lot more expensive). Definitely saves you some pennies.
There is also a little shop and the post office just down the road.
We walked everywhere in Prague from there as it's not that big a place.
If you want a fab meal experience then there is a great restaurant on the castle side of Charles Bridge overlooking the bridge which is just amazing at night on the heated patio.
It's the less expensive looking one of the two (though they are owned by the same people I think).