Morro de São Paulo has an excellent infrastructure of hotels and pensions. Actually you don't find many large hotels on the island. The typical place to stay is what is called 'pousada' in Brazil - which can be translated as 'hostel'. However, many of these pousadas are very well equipeed and have a comfort more similar to hotels.
Visitors of Morro de São Paulo have a wide variety of choice of many different hotels and hostels - for all types of tastes and budgets.
In addition to price and comfort of hotels or hostels other factiors need to be accounted for as well: The majority of places are locaed in the village or at the first, second and thrid beach. But there are also other places rather remotely located at the 4th and 5th beach.
As mentioned in the section Tips for Morro Travelers, the choice of your accomodation depends on what you are looking for: Do you want to be close to party life or do you prefer deserted beaches and privacy?
If you want to make sure you don't miss any beach party go to the second beach - this is where most parties take place. If you want to have many restaurants and shops close to your place then stay inside the village. However, when you stay in the village you will have to walk 5-10 minutes to get to the beach. If you want privacy and like deserted beaches go for an accomodation on the 4th or even 5th beach. The thrid beach is somewher e inbetween. However, consider that most shops are localed in the village and if you frequently want to shop and try out different resturants then the closer your stay to the village the better. (The 1st beach is closet to the village).
Since the 4th and 5th beach are pretty far from the village many hotels offer transport to the village and back.
See here is list of hotels and hostels in Morro de São Paulo. To know more details about each place visit their websites by clicking on the links. Please note that not all hotels have a homepage in English.