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The two most famous beaches/neighborhoods in Rio are Copacabana and Ipanema. Copacabana is slightly north and East of Ipanema, though the beaches are next to each other (walking distance). Ipanema is slightly more upscale and Copacabana felt younger and more alive.
 

Copacabana

There is one stretch of road, called Av. Atlantica, which runs along the entire stretch of Copacabana beach. Staying at Av. Atlantica, therefore, is a nice option. If you're trying to save some money (or just desperate for any room during Carnival), then don't shun hotels a block or two off Av. Atlantica (though don't stray too far, as some neighborhoods can be a bit rough).

Our recommendations:

Luxury: The Copacabana Palace Hotel (21-548-7070) is beautiful and centrally located along Av. Atlantica. You'll pay top dollar for delicious food, a beautiful food, and luxurious accommodations.

Standard: The Leme Orthon Palace (021-2543-8080) offers well-sized rooms and a solid location along Av. Atlantica. Don't expect anything fancy, but this hotel delivers a central location for a reasonable price.

Budget: There's no beating the Rio Copa (21-275-6644)for value. It's just about two blocks off of Av. Atlantica. The rooms are fairly small, but they have a private bath. The minibar was very reasonably priced (we filled up on bottled water every day), and the concierge spoke decent English.

Ipanema

Ipanema is a slightly more upscale area so you can feel comfortable wandering farther away from the beach. The "main drag" along Ipanema beach is Av. Viera Souto, though there are plenty of places to stay and eat off of the main drag.

Luxury: The Caesar Palace (021-2525-2525) offers impeccable service and is located right on Av. Viera Souto. The rooms are large and well-maintained and the staff courteous and helpful. You won't be disappointed if you chose to stay here.

Standard: Sol Ipanema (021-2525-2028) is also located  on Av. Viera Souto in Ipanema. Less expensive and less extravagant than the Caesar Palace, the Sol Ipanema offers more "standard" rooms. Many of them, however, have views of either the beach or Corcovado.

Check out this map to get a better sense of the lay of the land.

 
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