Does anyone have any suggestions? We are looking for a nice place, but preferably under US$200, for two nights?

Hotels Raffaello, Bonconte and San Domenico

Assuming you'll have a car, the Mamiani is pleasant and reasonably priced.

http://www.hotelmamiani.it/english.htm

GAC (or anyone else out there), which of these -- Raffaello, Bonconte and San Domenico -- would you most recommend? Also, has anyone been to Urbino in July? Is it very dead? If so, perhaps the Mamiani would be a better alternative? Thanks!

The San Domenico is right across the square from the Palazzo Ducale. It is the classiest and most centrally located of all hotels in Urbino proper (there are really only a handful). The Bonconte faces one of the City walls. It is in a very quiet and scenic location, but requires an uphill climb to reach the Palazzo Ducale. The Raffaello is a VERY charming property close to Rafael's house, but again requires a steep uphill climb. I could recommend all three (I've never been to the Mamiani, but would avoid it unless I had a rental car). Urbino is a small town, but you'll need to negotiate steep slopes no matter where you choose to stay overnight. With the San Domenico, you can limit the amount of uphill walking.