We took the overnight bus from Mumbai to Hospet. The bus ride was about 12 hours and we reached Hospet at about 8am. We had an amazing breakfast of dosa, idli, wada and filter coffee at Shanbhag Hotel. The food was good and very cheap!
Now for a little geography lesson. Hampi is sort of divided into 2 parts- the Heritage site of Hampi on one side of Tungabhadra river and Hippie Island on the other side of the Tungabhadra river which can be reached by boat. Whether you come by bus or train, you will be dropped on the heritage site side of Hampi.
After breakfast we headed to the JSW Vijayanagar Bus Terminal (which is just a 10 min walk from Shanbhag Hotel) to take the local bus from Hospet to Hampi. The bus ride is half an hour and the ticket is just Rs. 20 for the local bus and it drops you just where the Hampi Heritage site starts.
Alternatively, you can take a rickshaw to Hampi. As soon as you get off the bus at Hospet, there are many rickshaw drivers who will swarm around you to go to Hampi. The average cost is Rs.200. The rickshaw can drop you directly to your hotel if you are staying on the heritage site side of Hampi. If you are staying on Hippie Island, the rickshaw will drop you near the banks of the Tungabhadra river from where you have to take a boat ride to reach Hippie Island. Be forewarned that the walk from the rickshaw drop point to the boats is a long walk involving a steep flight of stairs; so be smart and carry a backpack rather than a suitcase for your luggage. Be prepared to walk A LOT as you explore Hampi.
There are numerous hotels and hostels in Hampi which are pretty cheap. All of them are quite basic, so don't expect any luxurious 5-star treatment. We were staying at a pretty little place called The R K Residency on Hippie Island. Though it provided only the basic amenities required, the garden and paddy fields surrounding the rooms and cafe were beautiful. An added bonus- the coffee was amazing!