There are 3 villages in the midlake that you should consider, as all 3 are served by the frequent midlake ferries: Varenna, Bellagio, Menaggio. All have all types of accommodation.
All 3 are equally quaint, and, due to their increasing popularity, unfortunately equally crowded. So pick your poisonous paradise. Varenna is the smallest, so more likely to get crowded. Bellagio however is the most famous, so not any better. Menaggio, slightly bigger but not as famous in the distant past, was not as crowded as the others, but I heard that lately Menaggio has become full of visitors like the others,
In my opinion your choice should be dictated by what you can find in terms of accommodations in the dates and at the price you prefer. They are just minutes apart by ferry, so the distance from the Varenna station is not an issue at all.
Another village you could consider is Bellano. It does not get the same frequent ferry service as the other 3, but it is just one train stop north of Varenna and is very quaint as well. It also features the famous Orrido (gorge) of Bellano.