The national currency of Guatemala is the quetzal, named for the national bird. Plural is quetzales in Spanish or anglicized as quetzals. As of April 2008, 1 U.S. dollar is worth about 7.65 quetzales (as of 29 Nov 2014). Travelers will need to change currency except in a few tourist locations and street vendors which may accept dollars (but not necessarily any other foreign currency.)
Banks that exchange dollars should give you a fair exchange rate. If you enter Guatemala overland from a neighboring country you will likely need to exchange with border currency merchants (a worse rate) because it can be extremely difficult to change anything other than dollars when in-country.
The larger banks should exchange dollars for quetzales. Travelers are often handed wads of Q100 bills which can be difficult to change in small tiendas or for small purchases. Always ask a merchant if he or she can change a Q100 bill if you have no smaller bills: Tiene cambio por cien? They may not, which means, good luck next time.
Most goods in Guatemala are cheaper than North America and Europe; hotels (excluding high-end resorts) are very reasonable. Meals are also generally cheaper. Beer and wine is about the same cost as the U.S. Some items like imported shampoo, sunscreen, and insect repellants are significantly more expensive than in the U.S.
Keep in mind that almost everything can be bargained for, and you can get good deals, but remember that merchants are generally getting by on low wages and arguing over pennies is pointless and can come across as rude. Bargaining is an art, but there is a fine line visitors should keep in mind between getting a deal and supporting a merchant with a living wage.
update...as of Nov 29th, 2014 the 1 U.S. dollar is worth 7.65 quetzales...very few places, very rare except charge cards or U.S. cash...travelers checks not accepted either in many locales..