Thailand has accommodation in every price bracket. Always take a look at the room (or better still several rooms, sometimes owners offer not the best/cheaper rooms first) before agreeing a price. In smaller establishments also do ask for the agreed price in writing to avoid problems during check out.
The best prices (30-50% off rack rates) for accommodation can be found during Thailand's low season, which is during May-Aug, which not surprisingly also coincides with the region's monsoon season. The peak season is during Dec-Feb.
The prices listed are average for the country, and vary depending on the region and season. Smaller provincial towns will not have fancy hotels or resorts, while on popular island beaches it may be hard to find something cheaper than 300-400 baht even during the low season.
Another issue for westerners to be conscious of, is the unusual bathroom set up found almost everywhere, except perhaps in the four and five star hotels. In Thailand as in other Asian countries as well, the bathrooms even in many new and well kitted out establishments, tend to have the shower system without any kind of water isolation, be it a curtain or door or whatever, to prevent water splashing all over the place. To most, this is quite irritating as a simple floor water containment and drainage with a some shower curtain would make everything much better, but it seems, proprietors don't see the logic, therefore, requiring guests to be very tolerant of the unusual bathroom layouts and trying to become adept.
Homestays are common in rural areas. Typically, what this means is that you will be staying at your host's home, or on the host's property in something less than a commercial lodging. Usually, meals are included.
Guesthouses are usually the cheapest option, basic ones cost 100-200 baht per room per night (100 or less for a dorm bed). This gets you a room with a fan, a squat toilet (often shared), shower (shared or private), and not much else. Better guesthouses, especially in towns with significant amount of foreign guests, have more amenities (European-style toilet, 24 hour hot shower, bigger room or even a balcony, free Wi-Fi, sometimes TV, everyday room service, fridge), with prices, subsequently, in the range of 200-500 baht. This makes them close to Thai hotels. The difference is they're more oriented to a Western clientèle, and as such, often offer various tours (sometimes overpriced), computers, and/or in-room Internet access, or even have a ground floor restaurant.
If you're satisfied with the guesthouse of your choice and plan to stay there for more than several days (especially during the low season or in the places with abundant accommodation options such as Chiang Mai), ask for a discount; this may not be offered everywhere, but if it is, the weekly rate may be 25% less or so, and for monthly rates it's not uncommon to be half as much. Normally, you'll have to pay for the entire period asked, but if something changes and you have to check out early refunds are not customary in Thailand. As such, if an early departure is possible (but unlikely enough to pay a week/month in advance), you should discuss this option with the owner/manager beforehand.
Hostels are not typical in Thailand. The reason is obvious: given the abundance of budget accommodation and that hostels are unfamiliar to Thais and, as such, purely Westerner-oriented, the price for a private room in a guesthouse will be almost the same, or even cheaper, than for a dorm bed in a hostel. You may get a bit more Westernised and hotel-like interiors, but at the cost of privacy. If you do insist on staying in a hostel, you can find some in the big cities by checking the web. Don't expect to find them just by walking by the streets, though.
Thai hotels start around 200 baht and go up to around 800 baht. The upper-end of this range will be air-conditioned, the lower end will not. The primary difference is that with a hotel room, your bathroom should be private, bed linen, and towels will be provided, and there may be a hot shower. The guests are mostly Thais. TVs are available except at the lower end; Internet access, though, is less likely to be present than in guesthouses; and is even less likely to be free or in-room.
Tourist hotels are generally around 1,000 baht and offer the basics for a beach vacation: swimming pool, room service, and colour TV.
Boutique hotels, 2,000 baht and up, have mushroomed during the past few years, they provide a limited number of rooms (10 or fewer) and more personalized service. While these can be excellent, quality varies widely, so research is essential.
Business and luxury hotels, 4,000 baht and up, offer every modern amenity you can think of and are largely indistinguishable from hotels anywhere else in the world. Some, notably Bangkok's The Oriental, The Sukhothai and The Peninsula are among the world's best hotels. The most luxurious resorts also fall in this price category, with some of the very best and most private adding a few zeros to the price.