Skye and I did stay at hotels for the rest of the trip because of the 3-night minimum that most villas or apartments have. However we stayed at some great places. In Venice we stayed at the Pensione Accademia in Dorsoduro.
We were just a short walking distance from everything but the area itself was not too touristy and right on the canal. It was beautiful, quiet and really centrally located for getting around. There was a water taxi stand very close by. They served a nice breakfast and there were lovely gardens in the front and back where you could eat. The front had canal views so we had breakfast there. The room was fairly spacious and modern and pretty reasonable as far as hotels in Venice go.
If you are renting an Apartment, the areas I would recommend are Dorsoduro, San Polo and Santa Croce and Cannaregio and Castello. They are all out of the super tourist areas of the city and, having done a little research, is probably where you will get the most bang for your buck. Keep in mind that Venice is not cheap, so you will probably pay more for a week rental in Venice than in a lot of other European cities. We had dinner both nights we were in Venice in the Cannaregio and Castello district. The area filled with interesting restaurant and shops, and it seemed from our dining experience, that it was filled predominately with locals. Dorsoduro also has a ton of great shops and little restaurants and is very centrally located, so for a short visit that might be a better choice as it is very close to most of the big tourist attactions. However any of these 3 districts are far enough out of the largest tourist area so that you can enjoy some of the quiet ambiance the city has to offer.
Good sites for apartment rentals include:
rentvillas.com does have a few apartments in Venice City, but they seem a little more expensive than the ones listed on the sites above.
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