In town there a few options worth considering. If you are on a budget the Best Western in town is a decent, yet clean option. They have a restaurant that is open for breakfast only. You will be right on main street, so traveling in and out of town will be easy. The Days Inn outside of the town limits on 211 is another decent option that is budget friendly.
The "Grand" Hotel in Luray would probably be the Mimslyn Inn. Its a historic Inn that went through a million+ dollar renovation around 2006-2007. If you are bringing the wife along, this is a decent option. Its also located on Main Street, so its minutes away from most attractions.
There are a lot of River Cabins and B&B's in the area. These offer a lot of privacy and enjoyment for the price. Many of these cabins are located along the river, but this is the time of year to get a decent deal. Do a search and you will find a lot of options. As noted above the Piney Hill B&B across the road is one of the highest rated B&B's in VA.
Another forgotten place is the local Yogi Bear. They have a bunch of Cabins, that range from very nice to primitive. If you are in the off season, this is a nice CHEAP option.
If you are looking to stay outside of Luray, New Market is a quick drive across the mountain. There are a few commercial Hotels right off I-81 in New Market.