We stayed in Primrose hotel at the edge of Nyaungshwe. It's a relaxing hotel with very friendly staff and a very nice breakfast. Early morning and late evening you will hear children studying at the nearby school. Their chanting style school lessons will put you asleep very soon.
In about 10 minutes walk you are in the centre.
But there are many guesthouses and hotels in town, if a guesthouse or hotel feels good for you, just stay. Negotiate the price is a must do. You will save a lot of money that way. The hotels are the biggest expense of your holiday. If they don't take your offer, just walk away, chances are big that they come after you and accept the price you offert.
When you come at the hotel the staff will tell you it's very busy in town. That all rooms are taken. This is often not true. It is to persuade you to accept the price. Calling a few days before you arrive is the best thing what you can do. We had the lowest prices when we called in front.
Keep in mind that hotels and guesthouses have to pay a lot of tax to the government, nobody dares to speak out how much, so don't overdo the negotiation.