The full moon is on the 2nd of January - this probably means that NYE should not be spent on Ko Phangan.

No No . The whole island doesn't get full up just because of new year or the Full Moon Party . Hat Rin beach where the party is held may get full - but that beach is spoiled anyway. There are still numerous places on a number of beaches that you could walk into at Ko Phangan that will not be full up.
Probably Ko Phangan has the most walk in style bungalows and guesthouses but at Ko Samui even at some of the popular beaches have cheaper type walk in accommodation back from the beach. You can also find cheaper style walk in accommodation at Ko Payam (Phayam) , Little Ko Chang , Ko Chang - Trat Province, Ko Kood - particularly at Klongchao back from the beach front. There are quite a number of places.
Best to try and decide which beach or island you would prefer to go to.

dave, you can now officially call me Cassandra if you like, as you certainly didn't believe me! ;-)

I said there were unanswered questions . I didn't believe it would close in that it would be discarded it will still be here in hibernation. Giora , so will you have something to look at during the hibernation period here is a PICTURE of some old wooden bungalows at Ko Samui.

What is a 'good hotel' is subjective and since you are only staying one night it probably doesn't matter much but for budget accommodation there is a newer hostel / guesthouse which I think also has rooms called The Port in a good location at the far end of the river front . Behind the the riverfront there is the old Thai Hotel and Ban Don Hotel.
Smartest thing is to spend the night at Surathani which is quite pleasant by the river front night market area. This is much more enjoyable than staying the night at Donsak which is about 50 kms away.
If you are arriving at Surathani in the evening you also have the option of taking the night boat to Ko Phangan leaving at 11 pm and arriving about 5 or 6 am.

PICTURE of Ko Samui when there were 30 - 50 baht bungalows

Thanks everyone for their opinions. I decided to save the Perhentian islands for a time when I have a bigger budget. On Koh Phangan now & diving Sail rock tomorrow before moving on to Koh Tao.

is there anything to do in Koh Phagnan besides the full moon party? snorkeling? Bike trips around the island? Are there any Day trip "tour operators" in Phangnan or are all from Samui?

Ko Phangan originally became popular as an unspoiled alternative island , but now the best beaches are becoming more developed but not as much as Ko Samui - although Westwood has found a cove she likes there.
If you are on a budget Ko Phangan is a cheaper generally than Ko Samui and Krabi . Railay Beach on Krabi is expensive and some feel over developed.

You could visit St East Asia in March . The monsoon in Thailand usually doesn't start in earnest till May or June. And that's for the north of Thailand. In southern Thailand you can visit Ko Samui and Ko Phangan islands - don't recommend Ko Samui though . It will be hot but not that much rain.
Also by March the monsoon is ended or ending on the east coast of Malaysia. If you are interested in islands suggest Tioman island and Kapas island. After that you could go to Sumatra and you would be there at a good time for weather. This if you don't mind cutting Vietnam from your plan - perhaps you could leave Indochina for a future trip.

These threads may give some tips -

Sumatra Update

Tioman Island Update

Kapas Island Update

Ko Phangan Report

Jack its a commercialized tourist attraction nowadays and has become part of Ko Phangan's tourist economy to an extent.
The party was started by bungalow owners in the beginning - Origin Of The Full Moon Party Thread