Counter-intuitive but not unexpected: the Olympics seem to have killed travel to the UK this summer. A number of sources have been reporting that hotel prices are 30% below what they were last year. Go to any hotel booking site and you'll find terrific deals on hotels in all price categories.
For real budgeteers, I'm posting this latest offering from super-cheap (but just fine) chain Travelodge. It will be discounting London rooms to just 26.50 GBP per night from July 26-September 9, with rooms throughout the UK going for as little as 19GBP for those who book 21 days ahead. Traveling sooner? Then 29GBP is the still-low-for-the-British-Isles price you'll pay to book a stay 7 days from now.
As always, these sales are limited in scope, with the earliest bookers getting the best prices. And the best properties, which can vary greatly in upkeep, particularly in London. On a recent trip there, I stayed at two Travelodges, one of which was quite nice, the other bordering on the seedy.
A final word: unlike other Brit lodgings, the prices above are per room, and they hold even for the rooms with pull-out couches that can accommodate up to four people (great news for traveling families).
Here's a link to this particular sale.
(Note: British Airways is currently running a sale that combines two free hotel nights with airfare from the US for travel between late July and September. However, the prices I'm finding when I plug in dates are so high, that I can't give it a whole-hearted recommendation. I'm mentioning it, since I'm making that statement based on just four searches. Perhaps you'll have better luck than I in picking the right dates to make that promo work.)