Niagara-on-the-Lake is one of the prettiest towns around, and for this reason, plus the fact that this is peak tourist season, you will spend a lot of money for a night in a B+B or hotel.
A couple of weeks ago, we did a trip to Niagara Falls and Niagara on the Lake. We thought we could save money by staying in Niagara Falls -- we found a hotel room for "only" $99 per night -- but once we had paid the usurious charges for parking ($20) and breakfast ($70 per person for an inedible buffet), we realized it would have been cheaper to stay at an expensive B+B in Niagara on the Lake.