I'm horrified at some of the hotel prices but don't know whether this is 'normal' for hotels or just because I'm a cheapskate and used to paying relatively little for campsites!
If you're like me, then definitely the second...
But, I can appreciate the dilemma regarding where to draw the line between campsite and 5-star luxury. I don't know which resorts (and prices) you've been looking at. The good news is that there are resorts all over Fiji to fit all budgets, even cheapskates. I managed.
There are a couple of practical considerations.
not in a town centre but maybe close by so that we can explore if we feel like it?
In general, most resorts are not near towns. If you stayed on the coral coast on Viti Levu, then visiting a (larger) town or two is an option. The more interesting 'small island' resorts might not even be near a local settlement. All facilities (food, drinks.. etc) are provided by the resort itself, and that partly explains the prices.
fairly relaxed but has opportunities to do activities if we feel like it
I'd expect any resort not catering specifically to the 'party' types will be relaxed enough. A bit of reading from a guidebook should alert you to the more obvious places to miss. Sea activities are more or less standard anywhere. There'll be some differences in quality of snorkelling, diving.
For other activities, you have to decide on the activity and pick the appropriate island. For example, if jungle hiking is a priority, then have a look at the island of Taveuni. There are some OK mid-range resorts in Matei at north tip which gets you close to the nature reserves on east side of island. There's enough of a village there to actually support a supermarket. However, I personally didn't much like the overall ambiance of the place (too many 'private property' signs outside the flash, 'exclusive' resorts etc). The south end of Taveuni has a couple of options and a nicer atmosphere.
This place, http://www.dolphinbaydivers.com/ , is technically on Vanua Levu, but accessed from Taveuni. The website gives you an idea of prices for a relatively more basic diving resort.
Ovalau is also an interesting place for hiking and for local culture, although the 'resorts' on the small islands of Leleuvia and Caqalai are also of the 'basic' backpacker sort. Follow this link: http://www.levukafiji.com/
what a reasonable budget would be
Well, "reasonable" is what you're willing to pay, and how much 'luxury' you want. There are basic (not multi-star luxury) resorts all over Fiji. I mentioned a couple above.
In the Yasawas I stayed on Waya island, chosen mainly for the hiking possibilities to supplement snorkelling. I stayed at a backpacker resort at the south end of the island. However, there is the well-known Octopus Resort at the top end of Waya island. Link here: http://www.octopusresort.com/
It's more mid-range, and so offering that much more luxury. It always gets good reviews, and could be a good compromise between bottom end and 5-star resorts.
