Some people go for the cheapest bed they can find, thinking, "I'm barely going to be there at all". This is fine if you have very low expectations and a sense of humor. Things to watch out for when going the cheapo route (ie less than €50/night) is whether the reception is open 24-hours (some lock the door at 2am, much to the dismay of late-night party types), whether the toilet and shower facilities are in the room or in the hallway (and on which floor? I've stayed in a hotel with a Turkish toilet -- the squat variety -- two floors down from my room), whether you'll have access to electricity if you have a cell phone/laptop/hair dryer (some budget hotels have no outlets in the room). Neighborhood doesn't always make a difference, since some of the least expensive hotels are right in the center, but there are certainly more in the non-touristy areas. As long as you're within a block or two of the nearest metro station, location doesn't really make a huge difference for budget hotels because you won't be there too much. But if you plan on staying out late, it will be easier to walk to the hotel or get a cheap taxi if you're closer to the center (ie the 1st through 11th arrondissements). Most extremely cheap hotels don't bother advertising, but you may pass one or two while walking around (rates are always posted in the door or window of the hotels in France). You can also find them on EuropCheapo.com or Rates To Go for last minute bookings.
If you're looking for character and location, it's possible to find this for under €100/night, and definitely under €150, even in the trendy Marais and St-Germain-des-Prés neighborhoods. Try the websites listed above, or even Paris Hotels, which shows very good photos and allows booking online. Another good website is ParisBy.com, with their own photos and reviews, and online booking. Two areas in Paris that tend to have good value for money are the Nouvelle Athènes district in the 9th and the north end of the 14th around Montparnasse, Denfert-Rochereau and Boulevard Raspail. Both of these areas are still within the "center" of Paris with easy access by foot or metro to major sights and shopping.
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