Budget Option
If you're not fussed about the perfect stay, and you just want a cheap, safe, and clean place to lay your head, the best place in town for that is the HI Hostel.
Hostel International is always a solid option anywhere in the world, and their Penticton location is located right downtown and within walking distance to the beach. It's by far the cheapest stay in town but is still highly rated for cleanliness and service. But of course it is still a hostel, so adjust your expectations accordingly.

Hi Hostel Penticton
Check AvailabilityDowntown and the Okanagan Lake Waterfront

This is probably the default answer for most people, and for good reason. Everything is walkable from here. The beach, the restaurants along Main Street, the farmers market, the marina. It's also the busiest and most built-up part of town, so if you're after quiet mornings on a balcony, this might not be it.
It's a good spot for people who want to be in the middle of things and don't mind some noise and foot traffic in exchange for convenience. This is where most of the big lakeside hotels and resorts sit, so it's also usually the priciest area, especially in July and August.

Penticton Lakeside Resort
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Bowmont Motel
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Kettle Valley Beach Resort
Check AvailabilitySkaha Lake

The quieter sibling. Skaha is a five-minute drive south of downtown and has its own beach, its own park, and a much slower pace. Good for families or anyone who wants lake access without the downtown crowd. You'll need a car to get anywhere else, though, so factor that in. Less nightlife, less noise, more of a "sit on the beach and do nothing" kind of stay.

Lakeside Villa & Nordic Spa
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Beachside Motel
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Empire Motel
Check AvailabilityNaramata Bench

Technically not Penticton, it's a separate village about 20 minutes up the lake, but it comes up constantly when people ask where to stay because of the wineries. This is the area for people prioritizing wine touring over walkability. You're not going to stumble into a restaurant on foot here.
Accommodation tends to be smaller scale too, think guesthouses, bed and breakfasts, and rooms attached to wineries themselves rather than big hotels. Worth a mention that renting a car or booking a driver becomes pretty essential if you're staying out here, since you'll want to be drinking wine, not driving between wineries.

Wesbert Winery & Guest Suites
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Naramata Courtyard Suites
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The Inn at Therapy Vineyards
Check AvailabilityVacation Rentals and Condos
Penticton has a lot of lakeside condo buildings that rent out short-term, and they tend to give you more space and a kitchen for the price of a hotel room, which matters if you're staying more than a couple of nights.

Peach Pit: Lake View Penthouse
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New Carriage House
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Chic 2-Bed Downtown Gem
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Aspen Guest House
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Where is the best area to stay in Penticton?
Is Skaha Lake or downtown Okanagan Lake better to stay near?
Should I stay in Penticton or Naramata Bench for wine touring?
What is the cheapest place to stay in Penticton?
Are vacation rentals or hotels better in Penticton?
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