Jungfrau Train Ride

The actual Jungfrau trip is a little over-rated, if you ask me. Wengen, might be your choice. However, you mention a budget; Switzerland is pricey. Read Rick's guidebook several times; then I think you'll be ready to make your final discesion .

You will need to be more organized for travel in this area. The area is very poplular and you just shouldn't show up without reservations. Second, you don't indicate when you will be traveling. In October and November, many places shut down to transition to the ski season. You'll need to check. You might find some places with no reservations but they most likely won't be the inexpensive places. There is a nice campgrounds in Stechelberg which is in the valley just below Gimmelwald. If you are going to the Jungfraujoch, Wengen and Kleine Scheidegg are on the same side of the valley. Kleine Scheidegg is at 7,000' and is great during the summer. But agian, you don't say when you will be traveling. I would suggest the Berhaus Grindelwaldblick as they do have dorms and its inexensive. I was looking at a couple of dates in Oct and they are sold out. The cog train to the Jungfraujoch orginates there so its a nice place to be. Great hikes down to Wengen as well. However, it could be snowing in Oct. but that shouldn't stop you from going to the Jungfraujoch. There's nothing but snow and a glacier up there anyway. If you are on a budget, do you realize that the round trip fare to the Jungfraujoch from Interlaken is about $190 each?

As you are on a budget there is a youth hostel next to Interlaken Ost station. This is the station the trains leave from for Jungfraujoch, however I would ensure you check the weather consitions before you buy your tickets, there are livescreens at the station and it would take seconds to check. There are other hostels in Interlaken but having never stayed in them I cannot comment on them.

I know it may seem obvious but I'll say it anyway. All the answers to the questions in your post are detailed in very great detail in the Rick Steves' Switzerland guidebook. You don't say when you are going - it will make a very large difference. Especially trying to go to a very popular place without reservations. Everybody is on a budget; since you don't outline yours it is difficult to know what you would call reasonable. In the guidebook there will be various prices.

I second the suggestion of Lauterbrunnen. However - I don't know if not having reservations is a good idea - no matter where you stay. If you are on a budget and are staying long enough, an apartment might be a good idea. You can usually stay in an apartment much cheaper than a hotel - and can cook some meals which will decrease costs.
I loved the train trip up the Jungfrau - but as others have pointed out - Switzerland is expensive, but worth it.

If you'd be satisfied with the Schilthorn across the valley instead, which many people are, you could try the hostel in Gimmelwald. The tickets up are a little cheaper to get up there and the views are spectacular on a clear day.

The tickets to the Schilthorn are a LOT cheaper than the Jungfrau. Of course there is no ice palace, sleding or zip lines but it's still a fun place to see. It also takes WAYYYY less time.

We found a reasonably priced hotel in Interlaken for our trip to Jungfrau. I would definitely have hotel reservations in advance, though you should be able to buy train tickets the day of without issue. We just went on tripadvisor to find our hotel...Interlaken is small so just about anywhere you stay will be walking distance to the train station.
Do want to mention however, that Switzerland is pricey. The Jungfrau train will cost almost $200/person, and is not included on a regular rail pass since it is a private line. That is the most expensive individual thing we did for a full two weeks in Europe. Food was fairly expensive in Switzerland as well. If you are on a very tight budget, you may find that there are more affordable places within Switzerland, or in other European countries (Prague was extremely affordable for example...and very cool).

Jen, actually Interlaken all the way to Wengen is covered 100% by the Swiss Pass and discounted 25% from there on to the top.

Apologies, Tim, i wasn't clear. The actual Jungfrau train up the mountain, Jungfraujoch, is a private rail line and is therefore not fully included in a Swiss Pass. The Swiss Pass will get you to Grindelwald or Wengen, but it won't get you all the way to the top of the Jungfrau. There is a discount for having a Swiss Pass, but you can't hop on the private rail line and assume that your existing Swiss Pass has you covered all the way up. A Eurail pass won't cover any section of this journey, but will give you a discount of 25% for the whole thing. Even with discounts and partial coverage from the Swiss Pass though, this journey is expensive. So again, I'd advise that if you are on a serious budget you might want to reconsider. I loved my trip up the Jungfrau - but it is not exactly a budget activity. So you may have to move some things around in your budget if you wish to include this journey.
Also, i should point out that the food up at the top of the Jungfrau is sub-par and expensive...my advice would be to eat up before you leave and bring a snack on the journey so that all you need to buy at the top of the mountain is a mug of hot chocolate :)

I was in Switzerland during the summer of 2009 and stayed in the town of Lauterbrunnen. I was traveling by car, and thought it would be more convenient to stay there than in one of the nearby towns that did not have road connections. I stayed at the Hotel Silberhorn, which I thought was reasonably priced, at least for Switzerland (as everyone else has pointed out, Switzerland IS expensive). My hotel room had a balcony with a view of the Staubbach Falls, which are the tallest (or among the tallest) in Europe. There were several similar hotels in the town which I believe were similarly priced. Lauterbrunnen also has good rail connections and is the starting point for the Jungfrau train. By the way, when I was there, if you boarded the train before 7 am, you got a substantial discount ... and I didn't have to get up all that early in the morning because the hotel was only 2 blocks from the train station.