If you've been using a travel guide book, it is going to have hotel recommendations included. Most have reviews, include pricing, or at least pricing categories, for each one. Many will be able to be booked online.
However, some of the smaller, independently owned hotels still do the booking themselves. Most you can correspond with via email, but some are a little more old fashioned, and only take reservations over the phone. If that is the case, do not let the thought of calling internationally and speaking to someone that English may not be their first tongue, intimidate you. These are business people that make a living providing rooms to tourists that, guess what, probably do not speak their native language. They all speak enough English to take a reservation!
Take a look at your itinerary, and start booking these hotels for each location. You generally want to book at least 2-3 months prior, just to ensure you are able to get exactly the hotel you want. If you're traveling during the peak season, you might want to start a little earlier. Most hotels do require a credit card to book the room, but most will allow you to pay in cash upon arrival.
Once these hotels are booked, write down the contact information (hotel name, address, phone number) and save for your records. There is also an awesome website called Tripit, that has an itinerary maker tool that allows you to either enter this information in manually, or it even has a feature that you can forward them any confirmation emails (for hotels, and even airline info) , and it will actually do it for you.
For my hotel choices, I go middle of the road here. I can not afford to stay in five star hotels, but I do not want to be inconvenienced by uncomfortable circumstances like an over crowded Youth Hostel. I prefer to have the best of both worlds: experiencing the country, people, and culture that I've immersed myself in, while not staying in "sketchy" accommodations. I lean toward small, independently owned hotels, near the city central, but sheltered from the areas that are choked with tourists.
Plus, most of these independently owned small hotels are run by the owners themselves, who are always MORE than happy to help out their guests. They are one of the best travel advisers you will run into while you're there. They can tell you where the best local places are to eat, the easiest ways to navigate the city, to even helping you book museum reservations and tours.