My husband and I are planning to visit the Southeastern part of Switzerland (somewhere near Lugano/Locarno/Ticino) the first week of September and are trying to decide on a base. We are flying in from Zurich and then going to Lauterbrunnen after exploring this area and are wide open to suggestions. We like hiking and scenery & would like to find a base that has a few restaurants and nice accommodations in the 200chf range. We are completely open to suggestions. We love Switzerland and have visited 3x so far - mostly in the Berner Oberland & Lake Geneva area.

My favorite hotel in that area is actually 2 miles into IT but still only :15 from Lugano. Nice people and fabulous food, and only :20 from Lago Como---we love this place:

http://www.stelladitalia.com/htm_us/fr0_index.htm

I think Locarno and Ascona would be perfect for you.

These should be in your budget:
www.garni-golf.ch is a nice small hotel right in the old town of Ascona. Only 30 m from the Piazza and the lake.

www.rondinella.ch is located centrally in Locarno. Might not look charming from the outside but it is nice inside. And the view from the balcony is not to beat.

If you want a very charming small hotel then www.hotel-ronco.ch would be great. Quiet location in a small village a bit above the lake. Rooms to the north (no particular view) should be right in your budget. Lakeview rooms are more expensive.

We love Lugano - it helps that we have friends living in the area (Gentilino - gorgeous church there) and DH's aunt and uncle used to live in Caslano, a Lugano suburb, so we've gotten to know it better than most casual visitors. However, it is definitely urban, not for someone who wants a rural or village base.

Ascona would also be a good choice. Locarno just doesn't "click"with us.

In Lugano, I often stay at the Hotel Pestalozzi. It's clean, well managed, some rooms have balconies and wonderful views of the lake. But lakeside rooms can get some noise on week-ends from a nearby disco. http://www.pestalozzi-lugano.ch/
We stayed there recently on a Lugano stop-over after a trip to Turin. Much as I love the view from the balconies, next time I might be tempted to go for a completely quiet room in the back. Definitely in your price range - you could get one of their most expensive doubles. FYI, some of the rooms have AC.

For restaurants, we love Il Bottegone del Vino http://www.lacastagna.ch/?p=2710 (we think it's more fun to eat inside)

Thanks for the recommendations, does anyone know if transportation right over the border into Italy is covered by the Swisspass? Wondering if we could get from Lugano to the Italian lakes using our Swisspasses.

In general, the Swisspass will cover your trip up to the Swiss border and you only pay for the part from the border to your destination in Italy. You can buy the whole ticket at once in Switzerland though so you don't have the hassle at the border.