Hotel Erwin is relatively new to Venice and is located right on the boardwalk. There are lots of beach views and a fantastic rooftop bar. It's an easy walk from Erwin to both the Main Street and Abbot Kinney shopping areas.

I'd check out Shore Hotel in Santa Monica. It's new (opened late 2011), eco friendly (LEED certified), and the location is great for walking the Santa Monica sites. I've been by it a few times and it looks new/nice from the exterior, although i've never stayed.

I stayed at the Hotel Angeleno, a Joie de Vivre Boutique Hotel in February of this year and they were very accomodating for a reasonable price ans also boasted free valet parking which was excellent considering other hotels in the area averaged about $40 a day for valet parking.  It was comfortable and all we needed as a place to sleep in Los Angeles.  It also has a restaurant and lounge on the top floor with gorgeous views of the city on a clear day/night.

Hotel Erwin in Venice Beach.  The absolute best view on the westside from the rooftop lounge called High Rooftop Bar at Hotel Erwin.  It's directly on the Venice boardwalk so you will have no shortage of people watching either.