Stephen,
Each of us here has our own "favourite" among the Cinque Terre towns, and Monterosso is absolutely my favourite for some of the reasons you mentioned. The fact that it has the largest number of hotels and other accommodations will be important in August, as it's going to be very busy then! I'd recommend securing a reservations SOON! If you can't find anything in Monterosso, you could also look at Levanto, as it's only four minutes by train from Monterosso.
In terms of which hotels to stay at in Monterosso, my absolute favourite is Hotel Villa Steno, with Hotel Pasquale a close second. You could also try Hotel Villa Adriana, Hotel La Spiaggia or Hotel Porto Roca, but may have to settle on something a bit higher in the price range. You could also try this list, although I don't know when it was last updated......
http://rebuildmonterosso.com/visitors-information/
Note that Monterosso has an "old town" and a "new town", but it doesn't matter which area the accommodations are as it's an easy walk between them. Be sure to have a fine hot meal on the outdoor patio at Cantina di Miky which is on the main street, not far from the train station.
