If you enjoy the local traditions and charm, unhurried rhythm of living, small, family-run pensions are the best way to enrich your experience. Owners and personnel there are friendly and open-minded, compared to the impersonal service you normally encounter in large hotels.
If you have a bigger budget, renting a villa is a luxurious and splendid idea. They are normally near or on the beach and provide more space and a great view.
It should be noted that in Greece hotels, especially in the islands but also even in Athens and other big cities, tend to be simple establishments. Rooms are typically small, and bathrooms smaller, with the shower often a hand-held sprayer; if there is a bath-tub, it's often a sit-bath. Sometimes in the most basic places shower curtains are lacking. Closets are often inadequate, and sometimes there is only a wardrobe. On the plus side, such hotels typically have a balcony though sometimes tiny or veranda, either private or a large one shared by all the rooms but these are usually spacious enough not to feel cramped. Standards of cleanliness are usually good, even in the simpler places. Those who want more luxurious accommodation can usually find it in cities and on the more popular islands but should check the hotel's quality in reliable sources to be sure of what they're getting.
Most Greek hotels now, even the smaller ones, have websites and will take bookings by email, though sometimes fax is a more reliable way to communicate. There are also numerous Greek and international hotel booking services which will make bookings, and sometimes these are cheaper, or have rooms available when the hotel itself says it's sold out. If you're not really particular about choosing a hotel, you can usually find a place on a walk-in basis without too much trouble on all but the most crowded islands, where rooms can be difficult to find at the peak of the season, and even in the shoulder season on weekends and major holidays. If you do get stuck for a room, try a local travel agency preferably one endorsed by a reputable guidebook or alternatively, ask at a cafe whether the owner knows of any rooms for rent; often they do.
On some islands, though this varies from place to place, the owners of accommodations will meet arriving ferries to offer rooms. Often they'll have a van there to transport you from the port, and will have brochures to show you. These places are perfectly legitimate, they're sometimes among the best value places. You can negotiate prices, especially when there are a lot of them trying to fill their rooms, and prices in the range of 20-25 EUR for a room or even a studio is not uncommon in mid-season. BUT they could be anywhere from a few steps away from the port to a mile out of town, so before accepting such an offer it's best to be sure you get a good idea of its location.
Places listed in the guide books tend to be booked up in advance and usually get more expensive as soon as they know they are in there!
Greek rooms typically have air conditioning nowadays. If this is important to you, ask before booking. Some rooms in old traditional buildings with thick stone walls may not need it. Televisions are also common, though the picture may be too fuzzy to be much use, and if you get the set to work you may find it receives programs only in Greek. Room phones are rare in the less expensive places.
The main problem you're likely to encounter with a Greek hotel room is noise. Anything on a road is likely to suffer from traffic noise, and even at hotels not on a major road you may find that that "footpath" outside is used as a superhighway by Greece's notoriously loud motorbikes. And tavernas and clubs nearby can generate decibels. If you're concerned about noise, it makes sense to choose your hotel's location carefully. The quietest ones are likely to be in an old part of the town or village accessible only by stairs which counter the prevailing "if I can drive it there I will drive it there" car and motorbike philosophy.
In addition to hotels, almost every popular Greek destination offers self-catering accommodations called studios or sometimes apartments -- the terms are pretty much interchangeable. Often these are run by hotels: a hotel may include some self-catering units, or the managers of a hotel may also run a separate building of self-catering apartments. Though not listed very often in travel guides, these studios are most certainly a viable option for many travelers. Typically, a studio consists of one large room, usually larger than a hotel room though sometimes there are multiple rooms, with a sink, small refrigerator, and two-burner hot-plate. They usually have a private balcony or veranda, a television, and air conditioning, though rarely a room phone and almost never internet access. In contrast to a hotel, they lack a front desk, there is no breakfast or other food service, and there may be maid service only once every two or three days. Studios are often in quieter and more scenic locations than hotels. For those who don't require the full services of a hotel, studios can be an attractive alternative offering better accommodations for the money, and the chance to economize on food by preparing some meals yourself.