Where to stay between Addis Ababa and Gondar?
 

I'd like to break up the 700+km drive from Addis Ababa to Gondar with an overnight stay about half way. Can someone suggest a town and hotel to stay? Also, what's the road like between these two cities?

Lalibela!
Not exacltly half way but you may not miss Lalibela.

It's pretty close to Gondor, but you should make a point of visiting Bahir Dar. Hotel Ghion is a nice place to stay on Lake Tana.

I stayed in one of the towns further along the route between AA and Gondor (Bure? Debre Markos?) as well but it was pretty non descript. I would recommend riding the extra distance to make it to Bahir Dar and hang out there.

As Joost mentioned, Lalibela is a must see. After speaking to some fellow riders who biked in though, we elected to fly in from Bahir Dar and save our tires. Some others staying at the Ghion minibussed in and said it was one of the most terrifying drives of their life.

Awramba
 

An alternative you may like to consider, close to Bahir Dar, is the community at Awramba (or Awra Amba). It's a self-sufficient non-religious commune for want of a better description. (Religion generally features prominently in Ethiopian life).

There's a little hostel for visitors, a small and nice place to stay overnight, (very cheap if I remember) and catering. You have the freedom of the commune. As in the rest of Ethiopia, everyone is very welcoming, but you'll be left alone to wander around as well.

We stayed there only one night because we wanted to cram as much as possible into our 1-month visa otherwise would have stayed longer.
We were the only visitors there at the time which was very nice I think.
The commune attracts some controversy and is more interesting for that.

There's a lengthy youtube here: Awra Amba - Utopia w Etiopii (1/2) - YouTube

Our blog entry is here: Horizons Unlimited Motorcycle Travellers' Stories - Ken Thomas

It's a few miles along the road to Lalibela from Wereta, down a dirt track signposted on the right.

Ethiopian Reggae in Addis
 

While I'm on here - If anyone in Addis is looking for entertainment, the Goethe Institute puts on smashing free concerts.

A bit short notice, but there's this: http://www.goethe.de/ins/et/add/ver/en9003762v.htm
on Friday 16th March.

I guess it'll be Ethiopian Reggae. If it's anywhere near as good as the concert we went to on our visit you'll have a great time.

Get there early if you want a seat otherwise it's standing, or sitting on the grass or on your own chair amongst the wonderful Ethiopian audience.