My number one choice is camping. My only complaint is the time it takes to break camp, but that will improve considerably as I get more and more organized during the course of the tour. In addition to saving large sums of money, it provides a completely different type of experience, combining the outdoors with meeting more interesting kinds of people. As I break camp, the fresh air puts me in a great mood as I begin my cycling day.
Camping adds to the weight and bulk you need to carry, but this is far outweighed by the great experience and the tremendous cost savings.
Hostels are of course cheap, but like cyccommute, they tend to be "musty, unkempt" places. I will only sleep in my sleeping bag on top of the covers. I've stayed in "bunkhouses," however, that had a bed consisting of only a rubber pad on top of wood. In those types of accommodations, I also use my sleeping pad. Even if you don't camp, I suggest that you still bring a sleeping bag and pad, so you can stay comfortably in a "bunkhouse."
On long tours, I try to stay in motels no more than twice a week. After days of touring and camping, even a cheap but clean motel makes me feel like a king. Hot shower, TV, clean soft bed, etc., all contribute to getting refreshed and rejuvenated for more cycling and camping. The worst part, of course, is the high cost, especially in metro areas, or the entire northeast where I live. Even in VA on the TransAmerica trail, I could not find a motel for less than $50, which is expensive by touring standards.