Everytime I've been to Philly the last few years, we made our reservations just a few weeks in advance when the hotels had a better idea as to their occupancy and room availabilty, and are more likely to offer discounts, especially through the websites like Travelocity or Orbitz.
Everytime we were down there, we got some kind of special weekend package for around $100-125 a night, which usually included breakfast or free parking or some other perk(s).
I also prefer the newer and more modern hotels, although we once stayed in The Latham which is older, but very charming. It was kind of like the Plaza in NY used to be: None of that modern cheap hotel furniture which makes every room look exactly the same; each room was decorated differently, and they had windows which you could actually open.
As far as downtown vs. waterfront goes, believe me when I tell you that there is nothing worth seeing or doing down there except restaurants. At least in my opinion, anyay.
I much prefer being able to step out the door and being within walking distance of everything.
