For your information, as i mentionned before and now, Karnataka was never and will never be a place that welcomes tourism. There's only one nice hotel there and it's called Swaswara, 15,000 or more per night! And again it is highly over rated. Beach is dirty, stray cows and rabid dogs hail. Only two shacks with only King fish as dish, alcohol only kingfisher beer. Fruit juices are a rarity. No parties, no naked white girls as people say(frustrated indians go there for that reason). Yoga and meditation are crap, massage is even worse!! After all it's karnataka, everything closes down by 10 pm, and then there is nothing to do! Go to canacona in south goa, only 80 km from there, you will have a better time and value for money. Before I pen off, Karnataka SUX BIG FREAKIN TIME!!!
I visited Gokarna in December 2007. It is a fairly quiet place with relatively fewer tourists. While I went to Om beach, there are a few other beaches there, some of which I have heard are better. You could try Half Moon beach. Other than Swaswara, there is another hotel there called Om Beach Resort. It is a very nice, very idyllic looking hotel, and the tariff for an AC room was Rs 3200 for a couple including accomodation and all meals. The beach is about 5 minutes drive from the hotel which the hotel would arrange for us without charge.
At the beach itself, you should try Namaste Cafe, it is a really nice and laidback cafe. We spent a lot of time there. You can also visit this link for my blogpost on Gokarna: yell-low-sapphire.blogspot.com/