Even though not a huge city, Prague has a considerable number of hotels. The interesting (and weird) thing about Prague hotels is that there is no unitary system of classing them, so the number of stars you will see displayed at the hotel doesn’t necessary have to coincide with the International Regulations.
Nevertheless, the quality of accommodation services rises to international standards and hotels and their staff do their best to provide quality service for their guests.
Of course, the further you are from the centre, the less expensive the hotels are, however this doesn’t always have to be a rule. As Prague is not such a vast place (it’s big all right, but not immense) and the public transport is cheap and reliable, it will not be an inconvenience to stay somewhere at a few tram or subway stations away from the major sightseeing places.