Hi,
We are happy to hear that you will be coming to visit us and planning ahead will insure that you have plenty of time to make sure everything is set. There are so many lodging possibilities in Israel. They range from the most luxurioius to the simplest and most economical. You can find more information regarding lodgings at: http://www.goisrael.com/Tourism_Eng/Items/Accommodations.htm
As far as the best location, you would have to decide that based on your interests and budget, but anywhere you choose in Jerusalem will be fine as the city has an extensive public transportation network that will enable easy access to any site.
Many colleges and universities have exchange programs and study abroad programs in Israel. Check with the office in charge of study abroad programs at your school for the most relevant information.
We're waiting to welcome you here in Jerusalem.