When is the best time of year to visit England & Scotland? Also, what are some good, reasonably priced hotels in downtown London (near the sites)?
Best time to visit
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To me the best time to vist is February. Not crowded, fares are lower, hotels are cheaper. You can get a seat at a restaurant much easier, sales going on at Harrod's. I've been to London in February and would go back in a second.

As far as "bad" weather, there isn't such a thing..only bad clothing!
Depends what you want to do and where you want to go.
May and June are lovely in England with fresh geeen leafage, maybe a bit later in Scotland as it's colder up there. In February it still gets dark early.
I like midMarch - zero lines - weather isnt bad - airfare was cheaper
Not Now. It has been raining ( a lot--we arrived December 27th). Did rain. Will rain. Things look brighter for Not January!
<<Also, what are some good, reasonably priced hotels in downtown London (near the sites)?>>
There is no "downtown" London, there is central London and it has various areas. Some are tonier than others (Mayfair v. Lambeth).
There is no "reasonably priced" hotel subject to a universal definition - state your budget.
And there is no hotel near all "the sites" because London is the largest city in Western Europe by far and "the sites" are all over the place. Get a map, check out the hotel listings and prices, and stay in Zone 1 (londontown.com is good for this with its interactive features and London Underground lines overlay). Good areas that fit some of your criteria include Westminster, South Kensington, Bloomsbury, Covent Garden and SouthBank.
for london, whatever time you've got free, though spring is nice.
for Scotland, I'd prefer to be there after the clocks go forward, giving an extra hour of useable daylight - this year it's the night of Easter Saturday/Easter Sunday on 30/31.1.13.
What is your budget, and what are your interests?
Lee Ann