You're going to stay in Rio all the way from NYE through Carnaval? Not visit other areas? Hope you have deep pockets. For both NYE and Carnaval you should expect much higher than normal rates, minimum stay requirements and possibly advance payment required. Are hostels the way to go? I think you know they typically cost less than regular hotels but they will still have many of the above requirements during these two peak times, when hotels (and hostels) get a big chunk of their profits for the year. You might check the Lonely Planet Thorntreee discussion board and/or guide books for recommendations of specific hotels. You likely will want to stay in the Ipanema or Copacbana area. You do NOT want to stay near the Samboadrome, where the big Carnaval parades take place (an area to visit, not in which to stay). You will need to book accommodations several months in advance, so don't wait until late this year and expect to find anything available without paying a big premium. People have already started booking.

Surf not great in Rio itself (and it's not the cleanest water), but some decent waves outside the city (e.g., Buzios). I don't have experience traveling there with a surfboard but would tend to be wary, given the high cost and difficulty of travel by plane, taxi, etc., as well as chance of theft even in a hostel. You will find surf schools and rentals in the area.