Our first trip to Ecuador someone advised us to bring small bills. We thought really? But its the best for sure and we were thankful for the advice. Try to keep things under $20. I have had success in spending a $50 once at TIA (mercado here in Cotacachi) but for the most part ones, fives and tens are welcomed and most used here. Bills do not have to be pristine as in other countries.
Make sure you have a coin/change purse as you will end up with considerable change.