Hello, John. I have been there early this year. If you mean stay at the residences along the river but not hotels, I would say Yes, you can. In fact, many of houses along the river are inns for visitors to stay. You can get in the old town and look around, to choose one you like and just arrange an night stay. I spent 120RMB for one night. If you have more questions, I can help. :-)

How can I get from Shanghai to Hangzhou to Xitang. I will be there on August 27th - August 29th. My flight flies out on the afternoon of the 29th from Shanghai.
Thanks!

Here is my suggestion, Mr kay:
You can take bullet train or buses from Shanghai to Hangzhou, which are easilt to find. You may get to Shanghai South Railway Station or Shanghai South BUs Station. They are close to each other and easy to choose either of them. You will get to Hangzhou 1.5-2 hours. Hangzhou East Bus Station has buses to Xitang, or you can get to Jiashan and then shift to Xitang which is 20-30 minutes from Jiashan downtown. Xitang Bus Station has buses back to Shanghai South Railway Station at 6:30,11:20, 13:35, 16:30, where you can take airport bus line to Pudong. You can also take direct bus to Xitang from Shanghai and then back to Hangzhou then Shanghai to Pudong. Hope it is helpful.

Thank You Ms.Wang! This was very helpful!!