Bagan is a very small town, which actually consists of separate villages (or small towns if you like). For most people, the only reason to visit Bagan is to see the temples, of which there are thousands! The most famous/interesting ones are in the northern part of Bagan, marked on this screenshot from Google Maps.
This means that the obvious choice will be to find accommodation in that area. On the other hand, this is the place where you will find the most expensive hotels and guesthouses, even the more simple ones will be much more expensive than anywhere else in Southeast Asia. But this is true for all Myanmar, for some reason, they charge at least double the price you would pay in neighbouring countries.
If you are not travelling on a budget, I highly recommend staying in that area. Not only because the most beautiful sights will be very near, but also because, at least to me, that area is livelier, more interesting, there are many more options for entertainment, eating out or shopping.
I, on the other hand, was travelling on a budget (which I most often do) and wanted to save money on accommodation. That’s why I selected one (Morning Star Guesthouse, see my review) in the New Bagan area, which is a place I wouldn’t call charming. Restaurant prices are the same as everywhere in Bagan (relatively high), but you don’t have that many options.
As for seeing the sights, it makes no difference really, since the sights are so far away from each other that it is impossible to walk, so you will have to hire some kind of transportation with or without a guide. I booked a tuk-tuk, the driver was a nice young chap, who wasn’t a guide, but gave me tips anyway (more about the sights in Bagan in this post). So If I was planning the trip now, I would definitely pay more for accommodation in the “centre” of Bagan.
