We stayed with two teens at the Otter Inn, which is in a great location just above Cannery Row, walking distance to the aquarium. We had the Family Suite (two adjoining rooms), but their regular rooms have 2 queen beds if that is big enough. Those rooms are $160 or so in summer, although the view rooms, if any are left, are probably higher. You have to call to rreserve the Family Suite but the others can be reserved online. It is listed under Inns and B&Bs on TA if you want to check reviews. I would happily stay there again.

Take a look at Best Western Monterey Beach Resort, the only lodging that is directly on the beach. It's reasonably priced compared to some others, and they have rooms with two queen beds. The ocean rooms are more expensive, but have a nicer view, of course. The other side of the hotel faces Hwy 1, but is not directly on the road.

The Mariposa Inn is a pretty decent "budget" accomodation. "Budget" is a relative term on the Monterey Peninsula. They have some pretty decent sized suites.

http://mariposamonterey.com/

Finding something under $200 in July will be a real struggle. Particularly to fit your group...