I have stayed at many hotels in Phuket over the years, where you stay of course depends on your budget. But think about which beach you want to stay at.
Patong Beach is the busiest, I agree the Thara Patong is excellent value for money, there are plenty of mid-priced hotels, the Patong Beach Hotel, Safari, Horizon, Merlin, some very good value hotels are Coconut Village and the Duangjitt Resort.
You may prefer to stay somewhere quieter such as Karon Beach or Karon Beach.
It varies a great deal, if you are visiting betweeen now and the end of October hotel rates are very cheap as it's the low season.
Patong does have a very large choice of hotels and places to stay, everything from small guesthouses and Bed and Breakfast to large major resort hotels. More luxurious hotels and resorts include Club Andaman, Gracelands, Le Meridien ( just outside of Patong on the way to Karon Beach ), the Amari Coral and many others.
12 Kata Noi Road, Kata Noi Beach, , Phuket
Nai Yang Beach & National Park, (Formerly Pearl Village Hotel), , Phuket
60/1 Moo 6, Srisoonthorn Road, Cherngtalay, Naithon Bay, , Phuket
230 Moo 3 Mai Khao, , Phuket
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