Last time I was in Kisumu I stayed at the Nyanza Club (off Jomo Kenyatta highway). It cost me about 2500 KES per night (+/- $32 US) for my girlfriend and I. For that price you get a room in one of several villa type buildings (4 rooms per building) overlooking Lake Victoria - ask for a room on the upper floor if you want to have a nice view of the lake. If there are a bunch of you and you are taking several rooms, you can probably negotiate the price too.

The rooms have relatively comfortable beds, TVs that work, phones, mosquito nets, ceiling fans, hot/warm water, a full "normal" bathroom with a toilet, sink, and bathtub with shower. The club itself has tennis courts. I'm told it has a swimming pool, but I didn't go looking for it. The club restaurant is quite nice, and serves Indian dishes (curries etc) and local things like tilapia and ugali (one of my favorites). If I remember right, the price for the room included breakfast.
It's not far to go into town - short cab ride. The guard at the gate can help arrange a cab, or find someone that treats you fairly and get his mobile number. Then you can just call him when you want to go somewhere.
Local sights... check out Ndere Island. You can get a boat from Kisumu Beach Resort (most days... depends on how clogged with water hyacynth the shoreline is), and putter out to the island and watch the hippos and crocodiles. I wouldn't pay more than 500 KES per person for the boat... the market on Sunday (I think it was a Sunday I went to the market) is a pretty interesting experience... put on you bartering hat and have fun <grin>. You could also go down to Dunga. There's sometimes hippos around there... I didn't see any, but the locals insisted they were there. There's also a few monkeys running about and causing trouble. Teh mosquitoes will drive you bonkers.
Anyway, that would be my suggestion for Kisumu. I don't have any suggestions for a Masai Mara safari... never been there.
I rather enjoyed Lake Nakuru - the millions of pink flamingos is a real sight to see. The park around Lake Nakuru has all sorts of animals.. giraffe, rhino, water buffalo, impala, lion, baboon, etc. It's not really that close to Kisumu, but you can arrange to drive through the park yourself, or snag a willing cab driver to take you around the park. The Midland hotel in Nakuru is decent... again +/-2500 KES per night. There are cheaper places, but they are noisy, and you will spend the night wondering if you will make it through the night.... well at least the place I stayed at on Bazaar Road was like that
One thing you MUST keep in mind is the rather poor condition of the roads. You are not going to be able to hop in the 4x4 and motor off for a leisurely jaunt of 250 km to the Masai Mara and back in a day.