I have the answer! I was just reading a post which was closed so i thought to start another one. I've just got back from my 3rd trip to Kotor Bay so I feel a bit of an expert on this!
The best reason to come to this area is to experience the beautiful scenery and quiet and peaceful atmosphere. If you want a typical beach holiday then you're better off going to Budva or Bar which are turning into a more 'Costa Del Sol' for mostly Russian tourists. Kotor Bay is best for romantic breaks and relaxing holidays (but it is close enough to visit the other areas for day trips if you want to experience a little more excitement)
Perast: Beautiful architecture and lovely atmosphere though it is on most tourist guides as a place to visit so it gets very busy with buses full of tourists turning up almost every hour in the summer.
Risan: Has a great beach and a more modern feel and also has a road that goes up into the mountains which is amazing to drive along. But it somehow feels a little cut off from the rest of the bay. If you look on a map you will see.
Prcanj: Though it has beautiful architecture and the largest church in the area, not so many tourists visit. And it is closest to Kotor (€3 taxi) but far enough away for total peace and quiet. For this reason i didn't include either Dobrota which feels a little like Kotor overspill as does Muo which would perhaps be best if you wanted to walk into Kotor everyday but would not be places to visit if you didn't stay there.
So there you have it. Oh and Prcanj also has a unique air quality which is beneficial for asthma sufferers and people come from all over the world to beathe the air.
For accommodation there is the Splendido Hotel which is in a great location though quite expensive. There are also a lot of 'sobe' signs for lodgings in family houses and there are a lot of apartments to rent which you can find online, http://www.holiday-rentals.co.uk, http://www.ownersdirect.co.uk, http://www.holidaylettings.co.uk. We stayed here this last time which was perfect for us - http://www.kotor-bay-apartment.co.uk.