Penestenan is a small village to the west of Ubud. These days you can think of it as as extension of Ubud. Penestenan is reached by heading west along Jl. Raya Ubud in the direction of Campuhan, then taking the sharp left up the hill. Penestenan is famous for painters and beaded purses. The main road, Jl. Penestenan winds thorugh town then swings down towards Sayan. On the way out of town it passes a small gang (alley) which I checked out. Some cute little guest houses were located there.
Jl. Kajeng is a cute little street right downtown in Ubud. Located on the north end of town, it runs uphill perpendicular from Jl. Raya Ubud. For people wishing to explore downtown Ubud on foot and at the same time live on a relatively quiet local street, this be work. The Pura Desa (village temple) is located at the bottom of the street and street itself is decorated with cement signatures like Mann's Chinese theater in Hollywood. There are a couple of places to eat on Jl. Kajeng as well as art shops and the Padma Bus office. There are probably 20 places to stay on this street, here is a small sampling.