If you are looking for midrange accomodation, I'd suggest the Mandalay City Hotel. It's fairly central (just south of the old Palace and slightly west). It has a little less character than some other places but service was very good and has a decent pool. We paid US$48 for a deluxe room which we booked a couple of days ahead through travel agent (who could get better rates). I'm sure rates will be up during high season though.
We also stayed at the Ayerwaddy River View for 2 nights on our return from Pyin Oo Lwin as we couldn't get rooms at the Mandalay City hotel. Although the views from the rooftop of the Irrawaddy were indeed very good, I though the hotel was overpriced. At US$80/night I do at least expect the hot water to work. The hotel is also very isolated from anything else, so you basically have to eat there or catch a taxi (or face a long walk).