Philbill -- note that there is a seat fee no matter what, the "Seat fee" is the RESERVED seat fee, the unreserved seats cost less but you may not get X seats together (depending upon the size of your party. In other words, if the route cost is 3800Y and the "seat fee" is 2600Y, you don't just pay 3800Y for an unreserved trip. You pay 3800 plus the unreserved seat fee, which is lower than the reserved seat fee for taking the risk of not getting a seat with your companions or at all. For instance, on the Kyoto-Katayama trip, the seat fee is 3800+ and an unreserved seat is 2300+ so you pay 6100+.

If you're only a party of 2, that's not going to be an issue bc you'll likely find seats and find them together.

Thanks hawaiian, panda and BigRuss.
I think I now understand the pricing and 'seat fees'!! Great information!
I am looking at hotels (thanks for the links), but still am unsure of where is the best area to stay in Kyoto (seeing that if I just stay there 4 nights I will only be seeing sites in Kyoto).
With Tokyo I need to think about the practicality of the day trips and the location of the key sites there so not sure again as to which specific area I should be investigating.
I am having problems with availability in Kyoto, but I get the impression that some hotels are only booking right now until the end of August.