I hope you don't pronounce your avatar name in the french way.

In Venice I found hotel Flora great and stayed several times there. Great rooms, small terrace and good breakfast. 150 m from Piazza San Marco.

In Rome I stayed in hotels I would not recommend.

Woin! ;-)

In Rome I've stayed in appartments either side of the Vatican, the important bit for me is easy access to the public transport system and to stay more in family regions of town, that way the food is more reasonable and you feel more relaxed. I'd recommend the same sort of policy. Once the public Trans system is understood the "world is your lobster"

In Venice we like Hotel Rossi - in easy walking distance from the train station and the Scalzi bridge, reachable on level ground with your rollaways, and also in easy reach of the Guglie bridge that takes you into an area where there are lots of gems and fewer tourists - places like Campo de Ghetto Novo and Campo Santa Fosca - a nice way to get to San Marco the long way around.
http://www.hotelrossi.ve.it/eng/listino.html

We really liked this b&b in Venice that was affordable

http://www.aitagliapietra.com/index.html

<I hope you don't pronounce your avatar name in the french way>
see ,now I have no choice but to pronounce it that way. �� ��
Again thanks to everyone for suggestions.
We have finally decided on hotels in Venice and Rome: the Al Codega hotel in Venice and Albergo Del Senato in Rome. We plan on walking everywhere, even to the Vatican City which according to google is about 30mins walk from Albergo Del Senato. Hubby and I are fairly active so walking to the various attractions shouldn't be a problem.
Now budget for food and attractions? Will $2000.00 USD be sufficient for the twelve nights? We are not everyday " fancy" eaters. We figure one or two days romantic restaurant during the whole trip and eating at cafes for the rest.
For perspective; other vacations we've been on it's usually breakfast, snacks and dinner. We typically spend around 50.00-75.00 USD for both of us and the most we've spend on a romantic dinner was about 150.00 USD.( both of us including tip).
The hotels in Venice and Rome already offer breakfast so that's taken care of��.

It does depend a fait bit on wine and where you eat. Assuming you want a bottle opening then E25 should cover lunch and supper per person. But, of course, you can go up to E65 with some effort.

But you don't have to tip anywhere just round up (to the nearest euro will do).

So 25 x 2 x 2 x 12 = E1200

Then you have to drop on coffee and cakes so say another E20 per day tops.

Sounds like a plan.

But all the museums cost money to visit.

Thanks bilboburgler. We don't drink wine or coffee:) we typically get water or soda/soft drinks with our meals. Had no idea tipping wasn't require; thanks for the tip haha.

soda/soft drinks are as costly, if not more so, than coffee or wine!!!

Ask for tap water; it's usually free.

And soda doesn't usually come with more than 1 or 2 ice cubes, so be prepared.