<font color=navy>That's a pretty good savings by staying at the Paradise Pier. The PP is undergoing renovation right now, and should be done in April/May. You'll probably get one of the renovated rooms, which will have more of that Disney theming. The PP has its own entranced to California Adventure.
Advantages to staying at the Disneyland Hotel. The rooms have sliding doors that open out onto a railed ledge, which is nice. The grounds are pleasant, with waterfalls, a koi pond, dancing fountains at night, a Neverland themed swimming pool...
If $ is an issue, then enjoy the PP Hotel and use your money for souvenirs, nice meals, however, I think the Disneyland Hotel is nicer, for the children especially.