www.albergodoni.it I stayed there in May 2008. It was recommended by a friend who stayed there last fall. She got it from Rick Steves. Rooms a little dark, but clean, good location, good breakfast.
I suggest a couple things in Venice...
1. Get a good map and get used to using it. Once you are comfortable, get lost in Venice and try to find your way back to your hotel. You will get to do this whether or not you try to
2. Go to Murano and check out the glass blowing museum and the glass blowing factories. Most of the glass blowing factories allow you to check out the glass blowing for free.
3. Go to Basilica Santa Maria dei Frari to see some of the most impressive art in Venice.
For Milan, if you want to see the Last Supper get your tickets early as they sell out weeks in advance.