We have stayed at both The Grand Californian and the
Disneyland Hotel. We only stayed at the Grand Californian once, and all the other many times we picked the Disneyland Hotel to stay at. The reason we stay at the DLH rather than the GC is that we found that after staying at the GC we really "missed" the Disneyland hotel and found that it was much smaller and darker than we anticipated. The rooms at the GC are very neat in a sort of "lodge" sort of way--but all of the woodwork does make them darker. The views are also very limited. We paid for a deluxe view (I think that is what they call it--a higher level downtown Disney view) but because this hotel is only about 5 stories high (compared to the DLH which are towers) we were put on the third floor and could barely see anything--despite paying a premium rate.
We had one of the rooms with the bunkbeds (which the kids did like) but it was so cramped in there compared to the room we were used to at the Disneyland hotel. We have three kids, though--so if you have less, it may be perfect for you. We were tripping all over each other trying to get ready in the mornings, which never happend at the DLH.
The other issue is that when we checked in (at 4:00) we had to wait forever for our room to be ready (to be fair this has happened at the DLH too). When they finally gave us a room, it was dirty. The trash had not been emptied, the toilet looked dirty and there was a lollypop stuck inside of the sheets of the bed--which looked to be slept in! Not what you expect when you are paying like 400.00 a night. I went down to complain and they they sent up a maid while we ate dinner, but I didn't really think they apologized correctly for all of it. Actually, no one apologized at all--they just said "we'll send a maid up...".
The lobby is really beautiful, but most of the time you are not hanging out in there if you have kids. We are the type of travelers who pay to stay in some very good hotels, because for us that is part of the experience. This hotel seemed like a disappointing one to us for the expense. We have paid more in other places (Maui, Hotel Del Coronado in San Diego) but those were great hotels.
But even with all of these issues, I might want to stay there again if we go at Christmas time. We took our first Xmas time trip last December (stayed at the DLH again) and had a wonderful time. Like Sherry said--I did notice that the GC had lots of extra charm during the holiday season (really pretty tree, fireplace, lots of decorations, etc...) and I can see how it would feel very "winter challet" to stay there at that time of the year. So as we walked through the lobby to eat our breakfast at Storytellers on that trip I thought "...hmmmm, maybe for next Christmas?"--so I would consider it again.
So for our family the DLH is a better fit for us. We like having a really great view of the Peter Pan pool or Downtown Disney, and all of the extra room and Disney theme touches. The extra space (especially around the bathrooms and closet areas) helps us to have some breathing room. But the GC is a pretty hotel with a neat design, and I can see why people like it too. If I were going there with just my husband (sans kids--like that would ever happen

) I would maybe like to stay there.
Hope this helps. I am a die-hard fan of the DLH

I even wrote a review on tripadvisor.com last night!
Take care,
Lisa