I just recently visited Kashmir and came back on 1st January... Here is my suggestion to you.. Since I have been there and have seen everything...
My Recommendation is to Stay at Upper Neelam, at Upper Neelam hotel (it has play land for kids, a beautiful views around you and a very reasonable and well furnished small motels which has all the facilities including kitchen, hot water, UPS and very neat n clean area.. the motel has 2 rooms and one dining area in it and its total cost is 3200 RS. So for one it will be half price.. 1600 and its worth it. Forget about Kutton and Keran, don't stop there.. its a waste of time. Kutton is also good but i would rate Upper Neelam better then Kutton. plus it will be easier for you to go towards sharda from there like 2-3 hours drive.. Stay at Kashmir Lodges at Sharda.. Very neat and clean hotel in main bazar right before the Main bridge of Sharda on your left.. it will be around 1500-2000 but you will be amazed with their hotels n sevices.. In Sharda you will find some ice on the other side of the bridge on a walking distance... its a good place to stay... but i don't think that 2 days would be enough for you to enjoy its beauty.. at least take 3 days and try to go towards KEL and Arang Kel as well... its fully covered in Snow and Chair Lift is also being operated these days... but its a freezing temp over there.. like you can expect minus 2-5 degrees ....
Stay at Kahsmir Lodges at Muzzafarabad as well... Give my reference (saqib From BOL has referred you) you will get a discount of 500-1000RS Owner:92 333 5524 975 - Mr. Zain Syed.. You can book all the hotels of Kashmir Lodges from Muzzafarabad, they will reserve the hotels for you so you won't have to be worried for your accomodation at Sharda at all. (important there are two kashmir Lodges at Shardia 1 and 2.. .The one you need to go is Kashmir Lodges 2 in main bazar.. not 1. We also got confused with that and missed the hotel and lived at valley trackers with very less facilities. so be sure about it.
http://www.kashmirlodges.com/ check out their rooms. Best place to live in muzzafarabad, you will forget PC and sheratan and one more thing.. there will be NO MOBILE SIGNALS after few kilometers of Muzzafarabad city only SCOM will work...
Keep NIC with you and Nikah Nama just in case! there will be snap checking on 4,5 different places.. and also... stay away from Indian's Checkposts.. do not stay at anypoint where you will see indian Check posts in front of you.... always ask your guide or local people whether you can stay at any point or not..
Best of luck!