I found a 2 bed in somerville for 1200 a month + electricity and heat. I'm sharing it with someone else, so it's a little more doable. My impression is that the farther from cambridge you can live, the better off you are money wise. The public transportation is reliable and quick, and a prof of mine noted that bringing a bike gives you a lot more freedom in terms of where you can live.
As far as looking for places, I have three words: craigslist craigslist craigslist. Great resource for finding reasonably priced housing in the area. A lot of the places are for rent by owner, so you don't have to deal with an agency or a realtor or anything. However, the listings on there turn over fast. Don't bother calling one unless you plan to be in boston for a viewing within 3 or 4 days, a week at absolute max. I got the whole housing thing done about 2 weeks ago. I called a bunch of places from wednesday to friday, flew out ther friday night, looked around and picked a place on saturday, finalized the lease on monday morning. It was the pull the band aid off quick approach, but it worked.
Good Luck everybody! See you in a few weeks.