"Khao San" means Rice. It's the first place where backpackers and tourist come. Located pnear Raj-Dam-Nern Rd. The're a lot of guest house, Restaurant, Pub, Bar, Vendors, Shops, Travel Agent, etc,. Everything you need for your trip even your driver's license or student card. You can find it here. One of my favourite restaurant is located on this road too. You can find a lot of tourist from all around the world here.
PS. It's okay to bargain in Thailand for stuff such as cloth, shoes, electronic etc,. but you can't bargain for your food. Also you can't do that in big department stores.