STAYING in Kathmandu
There are many hotels and guesthouses near the THAMEL area.  Most package tours offer the 2/3-STAR hotel depending on the price you paid.  It can range from 40-100USD for walk-in hotel accomodation.  For cheaper guest-houses in Kathmandu, the price range is USD10-15, and domitories are USD2-4, breakfast no included.  Most guest-house type accomodation are very homely type and provide adequate services.  

* Most hotel don't quote the cheaper rates, so expect to see USD40 and above for quotes over the internet.

Some recommendations:
Kathmandu Guest House
Its a place where you can find a USD80 room and a USD2 domitory.
Souvenir Guesthouse
(BRING yr own STAR! )
USD 8-12.





Hotels that I had stayed before:
Norbukingka Hotel
Hotel MoonLight
Hotel Traditional
Tibet Guest House
Hotel Norbu Linka
Manag Hotel
Acme Hotel (USD 10)
Soltee Crowne (5 stars)
Yak & Yati (5 stars) - suite!


*Tips: It is generally cheaper to book with a local trekking agent if you are extending the stay in Kathmandu.  The price difference is usually -50%!
Good Luck! :) You can always ask for HOT water from the hotel - FOC.    
Additional Hotel Info:
Kathmandu Guest House
Hotel Norbu Linka
Moonlight Hotel
Tibet Guest House
Manang Hotel
Hotel Traditional
Hotel ACME
Email:
travel_bugged@yahoo.com
As a budget traveller, I was kind of impressed and pampered with the 5 stars hotels!  Thats because of a travel package from Malaysia which combines a Casino & free meals!  Well, I am a casino person, so i'll skip those.  The air-tickets and stay with the package was too good to be true!

Well, we fly with Air Nepal though. Not such a good experience, but hey, I am still in one piece.  There was a major delay or flights for more than 12 hours! and we had to stay extra one night at Yak n Yati!
Now the flights are suspensed

In 2006, we flew Royal Nepal Airlines and the whole plane is full of Nepalese workers... except for a few tourists and we were quickly upgraded to business class which is not much difference from economy by the way!