I am travelling to Italy with my boyfriend in January (Rome and Florence). Any recommendations on hotels/inns, close to everything of course however on a budget of $100 per night. (maybe not so hard in this economy). Prefer small boutiquey places or B&B's.

A friend of ours stayed at Hotel Des Artistes in Rome and liked it very much. And I have seen other positive reviews on SlowTrav.com and here on Fodor's.

The Bee Hive in Rome is within your budget.

http://www.the-beehive.com/english.html

Search both cities at:

http://www.cross-pollinate.com/

That's a pretty low budget for major cities - only 66€. You might try EuroCheapo.com.

Alloro B&B seems to be about 74€ per night in February if you book the promotion rate of at least three nights. You might get a better rate by e-mailing.
http://www.allorobb.it/Eng/index.html

Check Baldassini for Rome.
http://www.baldassinibeb.it/eng/index.html

In Rome
www.hoteljulia.it
right by the Trevi, Clean and safe. Breakfast included.

in Florence
www.sanlorenzohotel.it
right by the San Lorenzo market.
Within walking distance to all.
Clean and safe. Breakfast included.

thanks to all - In Rome, we specifically want the Trastavere neighborhood. I followed another link on Fodors and booked Relais Cavalcanti in Florence. Great reviews - more than $100 but not much and sounds perfect. Any advise for Rome on the area we want. (also realizde if we go direct to the hotel we can negotiate better deal, especially in January).

We liked the Relais Cavalcanti. It's a good choice.

http://www.arcodellauro.it/index.php?lang=en

Hotel Casci in Florence is a decent family run hotel about two blocks from the Accademia and about three or four blocks from the historical center, including the duomo, the Uffizi, Piti Palace, etc. It's within walking distance of the train station. http://www.hotelcasci.com

Has anyone stayed at the Baglioni or Bernini Hotels in FLorence?

I stayed at the Bernini Palace a few years ago just before they remodeled and tripled their rates. What a lovely hotel!