What part of Amsterdam should I get a room in? We are interested in seeing the museums, nightlife and just everything in general. We are looking for a moderately priced room nothing fancy. Any areas to stay out of? Thanks for taking the time to answer.

I recommend avoiding the Dam Square / Damrak area, too crowded, tourist-central / noisy.
Stay just off center, ie. Leidseplein / Museumplein / Amstel / Joordan areas.
Here are some examples:
(by the way, review comments and hotel/brochures on www.channels.nl)

BRIDGE HOTEL -
http://www.thebridgehotel.nl/
http://www.bookings.nl/bridgeams.nl.en.html
favorable comments on TripAdvisor

HOTEL FITA -
http://www.fita.nl/indexhtml.html
http://www.bookings.nl/fita.nl.en.html
favorable comments on TripAdvisor

KAP HOTEL -
http://www.kaphotel.nl/
http://www.bookings.nl/kap.nl.en.html
mostly favorable comments on TripAdvisor

AMS TERDAM HOTEL (also Best Western) - a little more expensive than above
http://www.worldexecutive.com
http://www.amsterdamby.com/terdam/
primarily favorable comments on TripAdvisor (this one I've personally stayed in due to winning an auction package; quite nice, very convenient)

Most people prefer to stay in the museum area (just South of Leidseplein). Or there are some wonderful hotels on the canals, which is also a good area.
Central Station/Damrak/Dam area is close to red light district, busier and more "low class' establishments. (MCDonalds etc)

We love the Hotel Washington. 2 blocks from the Museumplein with good access to tram lines. Check out the Rants and Raves section for specifics and reviews.

the Jordaan, no question.

use bookings.nl - great special offers.
HTH!