Michael's advice is the best on your options. Don't take a water taxi from the airport as it is very expensive, however the price you've been quoted is double what it should be, therefore whoever gave you that quote is trying to take you to the cleaners, more than to the Lido. The water taxi fare from the airport to the Lido is €100 (US$ 140) for up to 9 people. Still expensive, but nowhere near what you've been quoted.
Regarding the benefits of being in Venice proper, rather than Lido, it is true that it's better to be in the middle of the historical center of Venice rather than having to commute back and forth from the Lido. However if the hotel savings at the Lido are substantial (Lido is generally cheaper), then a stay at the Lido might be justified.
As Michael mentioned it is imperative that in that case you both must buy the daily "vaporetto' passes (24h or 36h or 72h etc. depending on your length of stay). Those passes are for unlimited rides during the length of time you purchase (starting from the first validation) and pay themselves off after just a few rides (each ride is a whopping €7 per person otherwise)