Hi Force - You asked me: "I am looking to spend a couple of days in Lonavala or Matheran depending upon the place. I would also like to stay in a cheaper hotel or guest house around 1000 Rs with my spouse. So what would you recommend and having only couple of days would that be feasible going to Matheran or stay in Lonavala."
Here is a link to some guesthouses at Lonavala and Matheran.
Samrat is a cottage:
MTDC has a resort at Karla and at Khandala, you can try those. Go to http://www.maharashtratourism.gov.in and select the Hill Stations option. Under that, select Khandala/Lonavala/Karla. Click on the Green button under Accomodation for the tariff.
This is also a good site, with a lot of photographs of the resorts, so you can take a look, but I think it is higher than your budget: