I was in Venice last February during Carnivale, and stayed in two different locations which was a nice way to see the city.
As good budget options, I recommend both of these:
http://www.hotelalnuovoteson.com/eng/hotel.html
This was the was a great budget price, and short walking distance to San Marco. There's a narrow staircase to some of the rooms, so I suggest asking for a lower level room. Rooms were small, but tidy & renovated bathrooms. The conceirge was extremely helpful & pleasant.
Second, great budget option:
http://www.tripadvisor.com/Hotel_Review-g187870-d235884-Reviews-Hotel_Messner-Venice_Veneto.html
Mixed reviews, but overall a great budget option. I enjoyed staying in this area of Venice, Dorsoduro, better. It's across the water from San Marco, but only by one stop. You can walk to the Peggy Guggenhiem museum, Rialto bridge and the area is sprinkled with quiet, quaint restaurants. Messner is small, but offers great service & breakfast & free internet. The rooms are budget, but the location & price is hard to beat!