The Westlake is a nice area two stay but the prices are around 200 元 for a single room, some hostel are cheaper but the rooms are often very small. It really depends where are you look. Hotels and some Hostel can also charge 400 元 for a room/big room. If you are staying more in the city you also can find a single room for 140 元. This is not the most expensive city in China but the prices are higher compared to other places.
Many Chinese around the Westlake and the sign seeings places are mostly not from Hangzhou. Hangzhou is one of the most famous tourist spots in China, cos it is known as “the heaven on earth”.
What you can do in Hangzhou and how you can get there you also can find at Wikitravel: Hangzhou.