Depending on where you are in town, Kanchanaburi can be fairly charmless. I think the real beauty of Kanchanburi is down by the river. Most of the places by the river are a reasonably short walk to the restaurants and night spots too.
Did you have specific places in mind where you were thinking of staying?
Sorry, I haven't stayed there, but the write-up on Travelfish looks good and the reviews make me think Blue Star is worth a look.
We stayed at the similarly priced River Guest House for three nights and really enjoyed being right on the river. Take care.
I was there last month and stayed at Tamarind. It's 8 months old and was the best place (out of 6) that we saw in that high concentration of of g.h. operations. Spotless, large rooms in the rafthouse (I think that there were 5 or 6 rooms in total), with great bathrooms w/ or w/out hot water, and toilets that DID NOT dump into the river. B300.