The hotel saradharam is the only decent hotel to stay in chidambaram. The location is very convinient since it is located just opposite to the bus station. The hotel is attached with three different restaurents. You will get a complimentary breakfast.
Only Cons is it is little bit expensive when compared with the cost of living in chidambaram. They are charging almost as bangalore hotels rates (Rs 1750/- for an AC room and Rs 650/- for non-ac room). The give first preference to fill the AC rooms even though the non AC rooms are available they wont offered you that.
Still you dont have any other good option, you need to go with them. An additional information is that if you are going to Annamalai university from the hotel by auto please pay only Rs 30/- which is the standard rate. Auto drivers may charge you more if you didnt bargain.