I just came back from my trip to Hangzhou, Suzhou & Shanghai. For those who intent to visit these places on a budget - minus the expensive hotel charges - I would recommend staying at the international youth hostel. The West Lake Int. Youth Hostel is just opposite the West Lake in Hangzhou. Check out internationalhostelchina.com or hostelworldchina.com.

There are many local one day tours which we joined with the local tourists and it is worth it.