The exterior of La Casa Santo Domingo. Image courtesy of http://members.virtualtourist.com/m/9679d/198306/
Antigua is filled with many great hotels and hostels to stay in. For instance,the hotel Santo Domingo is a 4 star hotel with a 4 star restaurant, and it has beautiful grounds and a gorgeous art museum. The price per night is about $180 here, but it is well worth it for the architecture, artwork, the close proximity to Parque Central, the included breakfast, lunch, and dinner, and also the friendly and helpful staff.
There are also cheaper options that still feature many of the amenities a tourist might be used to. Posada La Merced is a great place to stay. It only charges around $22 a night. It is clean, has free Internet access (like nearly every other hotel in Antigua), friendly staff, a good security system, and free breakfast.