We stayed in Ubud at the Tjampuhan Hotel during both of our trips
to Bali, including one earlier this year. We really love that hotel -
it's uniquely beautiful. Prices are reasonable, but not cheap. We
negotiated US$70/night at the front desk, but couldn't get a reservation
beforehand for less than US$90/night.
Ubud is much nicer than the southern areas of Nusa Dua, Kuta, etc.
Nusa Dua is a fancy, phony tourist development only - very little
authentic Balinese experience to be had. It's also very expensive.
Kuta is just nuts. We stayed a few days in Legian at the Hotel Jayakarta,
and it was fun, but we hated the high-pressure sales tactics of all
of the vendors, who swarmed us everytime we went to the beach.
And our thoughts of surfing around Kuta were dashed when we heard
that ear infections are common following contact with the ocean waters
off Kuta because of untreated sewage, and we didn't want to risk
losing dive days because of ear troubles.
Ubud still has pushy vendors, but not nearly as bad as the Kuta area,
and there are many great cultural events to be seen up there, including
some of the best gamelans and dance performances on the island. There
are also many nice hikes to be had, and some awesome restaraunts.
Transportation to the airport and Benoa Harbor are pretty easily arranged
from Ubud - I wouldn't let the distance dissuade you.