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Accommodations

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Airbnb

local; flexible

Airbnb is a great option if you're looking for something more affordable than a hotel that is located in a cute urban neighborhood (vs. downtown). Most reservations have no-penalty cancellations.
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Here are some neighborhoods we love:
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Ukrainian Village
Logan Square
Andersonville
Wicker Park

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Hotels

familiar; downtown

Hotels are a great option if you're looking for a more familiar experience and want to stay downtown. If you want to be surrounded by skyscrapers and great architecture, this is for you.
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Here are some affordable, highly rated hotels:
 
Hampton Inn & Suites Chicago-Downtown
Fairfield Inn & Suites by Marriott River North
Acme Hotel Company
Hyatt Place Chicago Downtown/the Loop
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Vrbo

groups; families

Similar to Airbnb, Vrbo is better for families and groups. These can be a bit more sparse than Airbnbs, but are similarly affordable.
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Here are some family-friendly neighborhoods:
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Lincoln Park
Logan Square
Lincoln Square
Edgewater

Hostels

affordable; central

Hostels in the city offer a more affordable stay than hotels, but often with less privacy. Many are located downtown, offering similar access to architecture and experiences located in the city center.
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Here are some highly rated hostels downtown:

Freehand Chicago

HI Chicago
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Here are some highly rated hostels in other areas:
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Wrigley Hostel
Chicago Parthenon Hostel

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