Taupo is a very pretty town and has good facilities. You can stay very close to the lake and there are a number of bars and restaurants with great views. We did the Tongariro crossing - highly recommended although very busy! The i-site, as elsewhere in NZ is the place to go for information.
Insider Tip:There's a very nice walk to Huka Falls through the woods from a park on the outskirts of town. Very worth while. If you choose to go further to the damn and the next set of rapids make sure you time it for when the damn opens so you see more water going through - I think it happens a couple of times a day but check before you go!