There are a number of towns around the lake, but the main one is Panajachel. I stayed at villa lupitas hostel, which is up in town and a bit of a walk, but at only 50Q for a private room and secure parking and internet (even if it is as little intermittent), it is hard to beat. And I think it tied for my cheapest lodging of the trip.
It is as bit tough to find though. Chris and the guys at moto cafe recommended it. And told me how to find it. It is in an alley just across from the main church. If you prefer a quieter place to spend the night, and cheap, head there. There are plenty of spots further down and some partying type hostels, but that is not my scene.