I recommend the Anh Dao Hotel (Lotus Restaurant) in Sapa. I stayed there in March '08 for $13. single. I had a large room with small fireplace, balcony, big bathroom and great breakfast. A most charming place to stay in center of Sapa - very friendly staff here (one of my favorites in the entire country). They arrange transportation from the Lao Cai train station for $2.
I plan to stay there next winter when I return to Vietnam.