Hi Martin & Brian,
Whether you stay inside or outside the city will depend on which city you are visiting. In San Francisco, you really need to be in the city, where you can walk and take public transit to get around. Parking is terrible, and it is worth the money to be in SF itself. There are many good B&B's, especially in the Castro area. I'll post my friend's favorite when I can track it down.
If you absolutely want to go the cheapest possible, there are lots of chain motels like Motel 6 which will provide you with cheap, bare bones accommodation. But really, is that what you want to do? Probably better to pick the general class of accommodation you want (e.g. boutique hotel in LA, rustic resort in Guerneville, high-rise hotel in San Francisco, etc.) and then check out hotels.com or something similar to try to peg the best rate.
For reviews of specific properties check out Yelp.com or Local.Yahoo.com. Also, Craig's List (craigslist.org) is a surprisingly good source of advice. Check out the craigslist site for the city you are visiting, and then post asking for advice in the general forum.
If you want recommendations for specific businesses, post again describing what your ideal accommodation in each area is like, and then maybe I and others can be more specific.
Good luck with your trip!