Near the lakeshore on Calle Ramos, Hotel Casa Ramos (tel. 7762-0413, $20 d) has 18 sparkling clean rooms with warm Guatemalan wool blankets set in a small, plant-filled courtyard.
Along the same street, 
Hotel Sueño Real (tel. 7762-0608, $24–33 d) is an excellent value featuring comfortable rooms beautifully decorated with Guatemalan accents, private hot-water bathroom, fan, and TV. There’s a lovely second-floor terrace and Internet access on the first floor. The nicest room is on the second floor, just off the patio. The place and its guests are lovingly and well cared for by Pedro and Catarina Ramos, a charming Mayan couple.
Well-situated on a quiet side street near the lake and Calle Santander, Hotel Utz-Jay (2-50 Calle 15 de Febrero, tel. 7762-0217, www.hotelutzjay.com [1], $25 d) has comfortable rooms housed in garden cottages decorated with traditional Guatemalan fabrics and equipped with fan and private hot-water bathroom. There are good breakfasts (not included) and the friendly, knowledgeable owners speak English, French, and Spanish. You can also enjoy a traditional Mayan sauna, or chuj, here. Internet access is available and you can rent mountain bikes for getting around or go mountain biking along the lake on an organized trip.
Hotel Jere (Calle Rancho Grande, tel. 7762-2781, $12–15 d) has nine cheerfully decorated rooms with woven blankets and private hot-water bathroom, with or without TV. You can book shuttle buses from here.
If you want to be closer to the action along Calle Santander, there’s El Chaparral Hotel (Final Calle Santander, one block from the lake, tel. 7762-0540, $24 d), in a new multistory neocolonial structure. The comfortable rooms with private bathroom are well furnished with basic wooden furniture and cable TV.
Links:
[1] http://www.hotelutzjay.com