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Norway in a Nutshell Suggestions?

We will be traveling from Oslo to Bergen and would like to do the NiN. We are unsure which way would give us the cost scenery. We would like to spend 1-2 nights in a little town along the way. I see where people talk about staying in Balestrand 1-2 nights. What is your suggestion to see the most scenic sights of the fjords. Would it be best to take an express boat from Balestrand to Bergen OR get back on a train to Bergen OR take the bus to Bergen? Since we've never been along this route not sure of the routes to get to 'Bergen. OR is there some other little town to stay in besides Balestrand?

All suggestions are welcome!