Can anyone tell me which currency is best to use in Czech Republic, Poland and Hungary. Can we use euros or do we need local currency?

It's just about always best to use local currencies.
Czech Koruna (crown)
Polish Zloty
Hungarian Forint

The best way to get them is to use ATMs.

In most places you will need to use local currency - although you get the best rates of exchange by charging as much as possible.

Some tourist places will take euros - but at a scandalous rate of exchange. It makes much more sense to pull locla currencies from ATMs.

...actually in many instances I found many places in the 3 country take euro and post prices in both local currency and euro and if you pay in euro believe it or not in many cases they return change in euro.

None of these countries takes the euro. If you don't pay in local currency, then you'll lose in the exchange rate. Now, you may very well be quoted hotel rates in euros and might be able to pay in them, but that's really the only instance I can think of. You'll get a better deal from an ATM even if you have to pay a 3% commission (this is almost always cheaper to the built-in or separate commission on a currency conversion at a money changer).

Thanks everyone for your comments. That really helped us plan a little more for our upcoming trip.

I was in Northern Ireland where they use the British Pound. I was told they would take Euros and they did. Unfortunately, my change was in pounds.

Wally wrote: "I was in Northern Ireland where they use the British Pound. I was told they would take Euros and they did. Unfortunately, my change was in pounds."

Similarly, many -- but by no means all -- businesses in the Czech Republic, Poland, and Hungary will accept Euros and render change in the local currency. With very few exceptions, you will get a lousy exchange rate.

Wally, you probably got a bad deal.