I usually stay at the Hotel Colonial in Toluca, its quite nice. I seem to remember it costing about $40 for a big double room, I don´t know if they have cheaper singles.
If you arrive from Mexico City by bus, Toluca´s bus station is not a nice welcome (I don´t think its particularly dangerous - just a bit of a dump). Get a taxi to the hotel, and negotiate with the driver about taking you to the Nevado.
At the Nevado I´d eat at the taco stands down at the park entrance - great food!
If you´re there at the weekend the mountain will be busy, loads of people around and pretty safe. Midweek I dunno.
An alternative to staying in Toluca is Valle de Bravo, a lakeside resort town. Its about the same distance from the mountain, but further from Mexico City. Lots of nice hotels in most price brackets. V Busy at weekends, empty during the week. Nice little climbing shop there too.
I usually go DF - Toluca - Nevado - Valle - DF for a nice weekend trip. A taxi taking you to the Nevado from toluca, waitng a few hours at the mountain and then taking you on to Valle will cost maybe 1200 pesos (just Toluca to the mountain and back anywhere between 600 and 800 pesos - maybe you can get cheaper though?)