I'm a professional teacher/ amateur tour guide ( I've guided over 250 people on tours of Europe - I don't get paid to do it though). I'm taking a group of 52 on a tour of Europe that will include 2 days in Prague and 2 days in Budapest in 2010. In one of the cities, we will not have our private bus for a full day. Which city is easier to tour without the bus - in other words, which one has the most sites in a central location that is walkable (these are kids - I can walk them pretty hard over the course of a day)?
I would have to say that Prague is more walkable, although I do find that Budapest is surprisingly walkable. Some people might find it difficult though.
Both cities have public transport but I agree that Prague would be easier to walk. I would want to have lodging as close as possible to the Charles Bridge. From there you could cover most of it easily.
Prague is definitely easier, more stuff closer together.
I haven't been to Budapest (yet!) to compare, but I agree that Prague was very walkable.
Also, I don't think you have to stay close to the bridge. If you find the accommodations to be cheaper outside of the city center (I imagine they would be, especially for a large group) the subway was super easy to figure out without any help. Our tour group's hotel was somewhere out along the subway route. I didn't mind. It's the prettiest subway I've ever seen!