Have never used air asia but have used MAS quite a few times and they seem to have some cheap flights at the moment.
As for hotels it depends on your budget ParkRoyal is reasonably cheap and right in the middle of the shopping. For a bit more money there is Shangri La which is very near the night clubs but a short walk from the shopping also Traders and Manderin Oriental are close to the KLCC shopping centre. There are lots of other hotels in the Golden Triangle that are worth a look tripadvisor is a good place to check before you decide as they have reviews from all the major hotels in KL.

I too have used MAS from KL to Phuket. The Air Asia flights I've taken within Asia have all copped for a delay and they have hit us for excess baggage charges - they are OK a means to an end. If you've not sorted out your accommodation in Phuket yet its worth doing it early as Phuket gets full up over the Xmas/New Year period (well it did in non recessionary times). Train is not really an option unless you want to tie it with a land transfer as well as there is no train link direct to Phuket

Thanks for the info I will likely use MAS or Air Asia for the internal flight used Air Asia last year for Bangkok to Phuket and they were fine with no delays or excess baggage charges.

Also have the Pacific Club at Karon booked for Phuket, stayed there last xmas for 10 nights and it was superb.

Having a closer look at KL hotels there seems to be a wide choice and prepared to pay around £100 per night for a nice hotel and there seems quite a few to choose from.

We had Xmas dinner at Shangri-la last xmas. It was lovely. It really all depends on your budget. If you are wanting to be really in the centre of everything you have the Park Royal, Westin, Marriot,Ritz Carlton and Grand Millenium. All Bukit Bintang area shopping etc

Traders( part of Shangri-la group). Mandarin Oriental, Concorde, Shangri_la Equitorial, Rennisance all roughly in the Twin Tower area. Next to Jalan Pinang. Where there are night clubs and some bars.

Crowne Plazza, Isitana and Novotel close at hand as well.

Really depends on your age group. What you are looking for in nightlife. Not a lot of normal pubs but you have the disco bars in Jalan Pinang.