Betws-y-Coed is really cute. For my taste, it is a little out of the way (especially if you are wanting to visit Edward's castles). This summer, we stayed in Llandudno. We were blessed to have friends with a flat that we were able to borrow, so I don't know about hotels. However, there were several as it is a British "resort" town. I'm a big believer in B&Bs over hotels, though.
If I was paying, I would probably choose Conwy. It was much cuter/quaint that Llandudno, but only 5 minutes away if you want to go to the coast. However, as "dead" as Llandudno was at night, I'm sure that Conwy is even more so. They are all small towns that don't really have night life.
The one for absolute sure is DON'T stay in Caernarfon. The castle was awesome - and a must see - but the town was definitely "work-a-day" and not very nice to look at.
So my preferences would be: 1) Conwy, 2) Llandudno, 3) Betws-y-Coed, and 4) Caernarfon - only if you absolutely HAVE to.