US dollars or Argentine pesos are widely accepted in Uruguay but i would say that you're likely to get a much better exchange rates with US$ than with AR$. The only time you will need to use Uruguayan currency is museums, which need to be paid using a Uruguayan 50 centesimo.
At the moment you can get about 8 pesos a dollar, but as the exchange rate fluctuates so much, how many pesos you get per dollar will depend. Certainly bring as many dollars as you can because it's cheaper exchanging physical dollars than getting them via the ATM's.
I was there in 2011 and people accepted and exchanged American dollars all over the place...Uruguay is one of the easiest places to exchange in south America. I would say not to exchange at the airport though because of the transaction fee. Instead, do it at the convenience store, and places like that.
US Dollars are accepted in Montevideo, Colonia and Atlantic beach resorts and they're the best currency to have. If you happen to come from Canada I suggest exchanging Canadian Dollars into US dollars because you will get a way better exchange rate.