RE: where are the bars?
Stay along Jeju's southern coast. With your budget you can probably stay within Jungmun Resort area. There are lots of decent hotels around...
There is nothing much to do in Jeju-si (city). Hence, I really do not recommend to stay there. Fly onto Jeju-Do, rent a car and hit the road. The southern part is really nice.
As for bars:
Frankly, I never looked for bars during my trips to Jeju-Do but all hotels have some good bars and restaurants in case you're willing to pay the charges. In this respect, Jeju-city might be a better place to stay but I don't think that your main purpose of visiting Jeju-Do is to go into bars, is it...?
Have a look at my VT Jeju-Do page for more details if you like.
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