We stayed in a kibbutz at Ein Gedi which was nice. I liked that we avoided the big 'glitzy' hotels on the dead sea and while it wasn't luxurious it was very comfortable. Plus, it was interesting to learn more about kibbutz life which is a big part of the culture in Israel and we were close to the Ein Gedi spa where we took a dip in the dead sea.
We stayed two nights, arriving the first afternoon from Petra and had enough time to go to the dead sea before dinner. Then we spent half of the next day hiking up to a nearby waterfall and the other half back at the spa. The next morning we headed back toward Jerusalem.
If you are planning on visiting/climbing Masada, it is in a convenient location close to the Dead Sea. There is a great, relatively new hostel at the foot of Masada connected to the cable car. It's about half-way between the Dead Sea resorts of Ein Gedi and Ein Bokek (~15 minute drive from each). There is something to be said about staying at a hotel actually on the sea, though. The benefit of staying on the sea itself is that you will have access to a private bathroom and shower, which is very nice given the salinity of the water. Ein Bokek in particular has a number of beachfront restaurants that also have shower and changing facilities for which you can buy a pass.