In preparation for Nikko we had to rise at a rather early hour. Reason being, the journey takes a considerable length of time. If you have a Japan Rail pass, the Shinkansen may be worth a look.
Because of the travel time I strongly recommend booking accommodation so you can get a full day. We opted to stay at the zen hostel, which Kyle has stayed at before. The hostel is run more like a traditional guest house and some rooms are traditional Japanese style, complete with futons. As it is quite rural, the owner offers a shuttle from Nikko station.
There is a nice fish restauant within walking distance, run by a rather energetic elderly chap. I enjoyed the food and service was friendly.
The original plan was to start exploring Nikko upon our arrival but it looked like the weather was going to turn (read - thunderstorm). Since I've been caught in one downpour so far this trip, I wasn't eager to repeat the experience.