As far as lodging goes, I stayed in one of the wooded cottages at the Olanthang Hotel in Paro, hotel Riverview in Thimphu and in some small guest houses. The accommodations were basic, but adequate. There are many new options to consider.
Since I was there Amanresorts has built Amankora, which is a series of lodges throughout Bhutan in the valleys of Paro, Thimphu, Punakha, Gangtey and Bumthang. Taj Hotels also has the Taj Tashi in Thimphu. Uma Hotels had a boutique hotel in Paro known as the Uma Paro and recently opened one in Punakha, the Uma Punahka. Wallpaper* Magazine included the larger, 78-room Le Meridien Thimphu in their list of ‘Best Urban Hotels’.
I have also read good things about the Gangtey Goenpa Lodge in the Gangtey Valley if you are further afield. There is also the Druk Hotel Thimpu,
Le Méridien Paro, Riverfront started welcoming guests and reservations in Bhutan. The new property marks the opening of the luxury chain’s second hotel in the country, following the successful opening of Le Méridien Thimphu late last year.