Twice w/my wife: We stayed at the Phi Phi villiage, one of the three northern resorts not in the town. Beautiful and secluded and a 5 star PADI dive shop on premises. Then, (Dec 01) the staff was very professional. Not cheap, Cheapest bungalows were about 80US$, 100 for one right on the beach. But, the place is gorgeous.
Phi Phi Island Princess. Quite honestly for the price difference between there and Charlies (next to one another, Charlies is a dump though) I would go back to Charlies and make a point not to stay in the bungalow much. I wouldn't spend a week in one.
Once with a friend, we stayed at Charlies (extremely popular amongst the partying backpacking crowd). Cheap, but it is in the Lonely Planet and they take reservations (over the internet too) so it is packed. Both these places (as much of Phi Phi) have a raw sewage smell. Although faint, you get used to it, supposedly (I didn't). One of the reasons I would stay here before PP Princess is morning and night the Princess waters their plants with recycled water and the smell lingers, and the mossies come out.
If you walk all the way through the town, past all the dive shops (stay on the main path, and if you are carrying gear take one of those little motorcycles with the side car, especially if you don't have a reservation they'll get you there first and they all know one another) there are several nice bungalows once you get across the little bridge. There were also a few under construction (by the new Mosque) that are probably done now. I paid $16 for one right on the beach (nice beach) I think they were asking $20. Very nice people who worked there and a funky little outdoor grass hut bar that drew a crowd more of my ilk than most in Phi Phi.
If I were to go back I would look at this area because it is a 5 minute walk out of the main part of town and away from the congestion.
Also, there is a very nice French restaurant right in the beginning of town (before the bank Kiosk). If you go to Phi Phi it is the best restaurant I found and relatively reasonable.
Keep in mind, that vis can be very bad depending on when you go.
Also, there are a fair amount of posts about PP on this board.
You may also want to look at Lanta, I hear the diving operations based out of there have picked up. I know White and Blue opened there 3rd location there two years ago. I believe Jonathan has been there or has a friend who has.
Good luck, have fun.