We will be in LA area for 3 days/2 nights. Not a lot planned but going to Universal for one day. Can you suggest an area to stay/ hotel for 2 nights. We are thinking of staying in Farmers Market, Venice Beach or Santa Monica areas. But hotels are out of our budget which is about $150/ night. We will be there late August.

That's a pretty low budget for hotels in LA, except for basic motel in HOllywood or South LA or Culver City, something like that. I was going to suggest the Elan HOtel which is very central (and is near Farmers Market, at least the one on Fairfax) and moderately priced.

http://www.elanhotel.com/

I sent a friend there and she relaly liked it, has stayed twice when in LA. But I checked and its rooms seem more like $225 in August. Actually I just checked and the Hollywood Roosevelt Hotel is only about $200 a night, that would be a great experience and good location, if you do increase your budget.

The Quality Inn on N La Brea in Hollywood is in your price range. It's just a little bit south of Hollywood Blvd and near the Walk of Fame and a metro stop, would be a fairly convenient location.

Booking.com says the Jolly Roger hotel in Venice Beach is in your price range BTW. It's not that great an area (I used to live n Santa Monica and know that area), really, but it would be near Venice and SM if that's what you want. It also says the Ramada Inn, marina del Rey is in your price range. It's really about the same place as the Jolly Roger, on Wash Blvd.

It also says the Ocean Park Inn in SM is about $150 a night. This is just a simple motel, of course, but might be about the same as the Jolly Roger and Ramada. The SM Pico Travelodge is also only a bit over $150 a night. I think that's about the level you'll get at that range, those cheaper motel type places.

Late August is HOT, I wouldn't want to stay near Universal. Try the Comfort Inn in Santa Monica, the Wilshire Motel or The HIlgard House in Westwood which is at least on the westside where it's a bit cooler. If UCLA is starting back up in late August, however, then Hilgard may be full. There's also the Beverly Laurel near Farmers Market, the Wilshire Crest and the Park Plaza Lodge. But you're getting closer to Hollywood, and hot/smoggy.

I assumed that you will have a car. If not you have to stay in Hollywood so that you can visit Universal easily and get back to the airport cheaply on the metro and flyaway. Quality Inn on La Brea in Hollywood, or the Days Inn or the Motel 6 on Whitley will fit your budget.

You might be able to get Sea View Inn in Manhattan Beach in August but you need a car to stay there. Manhattan Beach is close to two freeways.

The Quality Inn-Burbank Airport is less than $100 (advance purchase). It is within walking distance of the Metro which is across the street from the airport entrance.
It can be a bit noisy with the freeway to the east and the airport to the west and the railroad to the south.
Plenty of restaurant choices in that area as I recall.

The Quality Inn Burbank is not near the airport or the metro, and the only dining nearby is Jack in the Box. Also, it gets dreadful reviews, some of the worst I've seen.
Tom is probably thinking of the Marriott. But Burbank is a hot muggy mess in August.