A houseboat tour in Kerala, India is definitely a "must do", when visiting the southern part of India / Kerala. 

We hoped to find on a houseboat departing from Kochi. Though, we found that all the boats with overnight stay are departing from Alleppey, approx. 1 1/2 hour drive south of Kochi. You can only take day trips to the backwaters from Kochi. 

Heard that the quality of the boats should vary quite a bit, so we did not book a boat in advance from home. 
In Kochi we were told that you could just go the harbor in Alleppey in the morning, check out the quality of the boats and choose the one you liked. This would be 7000 - 8000 rupees (Feb. 2012) all incl. for a one day tour (one night). 
Though, we ended up choosing to book the houseboat tour in Kochi with Anil Mathews, the manager at Quality tours india as he and his associates seemed very trustworthy. The service provided fully lived up to our expectations.