A couple things to note concerning money in Bolivia... First, a little goes a long way. Second, despite this fact, be prepared and carry enough.
Travelers to Bolivia will be pleasantly surprised at the low cost of living here. Whether it's $2 for a basic lodging or $40 for the swankiest hotel and spa you've come across in South America, your money will stretch in Bolivia so take advantage of it. As with the example of accommodation, not so much money gets you a little comfort, but just a bit more than a little gets you a lot. This rings true with food, souvenirs, tours, etcetera. In Bolivia, if you are looking to save, you can, and if you are looking to splurge, it's easy to go all out.
Bolivia's currency is called the Boliviano, though locals often refer to the cost of things in pesitos; they mean the same. While rates do change against the US Dollar and the Euro, the Boliviano is relatively stable (at the time of writing it was approximately 7 Bs. to $1 US). There are coins and paper notes, in denominations of .05, .10, .20, .50, 1 and 2, and 2, 5, 10, 20, 50, 100, 200, respectively. The lowest of the centavos are hardly used, and the largest of the bills are hardly accepted. Therefore, it is very difficult to make change in Bolivia, either with US Dollars or Bolivianos. To avoid hassle, carry small denominations whenever possible. ATMs most often shuffle out the high notes, so break them when you can, at supermarkets, hotels, tour companies, and the like.
US Dollars are commonly accepted across Bolivia, so it's always a good idea to keep a stash in addition to your Bolivianos. Try at restaurants and hostels, but if you are unlucky with your US cash here, there are casas de cambio (exchange shops) in all the major cities and many of the minor towns as well.

The reason it is recommended to “carry enough”, of both Bolivianos and dollars is because ATMs are hard to come by, so if you run out you might be stuck. Check ahead to see if there will be ATM's where you will be passing though, but be prepared for anything (credit cards are not widely accepted and wiring money is not a simple option here). It's worth reading more about ATMs, credit cards, traveler's checks, and wiring money in Bolivia.