Does anybody know any budget hostels or hotels in Caen or nearby area that they would recomend?

Check Logis de France. We are staying near Caen the end of May. Unfortunately, I can't recall the name of the place and I don't have my info at hand. I will check and post it later. I found quite a few selections to choose from. When will you be there ?

We stayed at the Château de la Bellefontaine just outside Bayeux a few years ago, and I would call it a "budget" accommodation for what we got - a HUGE, airy, beautifully furnished room for about 80 euros a night (the hotel has no restaurant or swimming pool if that matters). It had lovely grounds and friendly staff and we loved the place.

It depends on what you mean by budget, but Caen, like most French cities and large towns, has Ibis, Mercure and Campanile as well as other chain hotels which are modern, cheap, clean, and utterly without charm. However they are good value for what you pay.

I was all set to give you a recommendation, but then I read your screenname and decided I don't want to deal with you.

The hotel Bernieres is in the center and really nice for the price (good breakfast, friendly) I was there about 4 years ago myself.