For starters, you might want to check out my 2006 trip report
. I'll have to look up the hotel we used in Hilo...it was adequate but not the nicest place. Of course, my opinion of hotel rooms is that I'm there maybe 8 or 9 hours a day, most of which I'm unconscious, so as long as the sheets are clean and the shower is hot, I'm satisfied.
While you're in HI, plan on spending a few days on Oahu, as well. The Arizona Memorial is a very emotional place to visit. The Polynesian Cultural Center on the back side of Ohau gives you a taste of a lot of other islands' societies and customs. Hanauma Bay is easily reachable by city bus and is a great place to snorkel. (Actually, you can get to all of those via the city busses. Takes a while to get around to the PCC but the others are quite reasonable from downtown Honolulu.
Contact me off-list if you want more specifics.