<font color=navy>The Candy Cane Inn is probably the most sought-after & popular of the local hotels/motels to stay at. It's quaint, serves continental breakfast, and has a nice pool area. It's one, maybe two-story (I can't remember right now). Candy Cane Inn sits on Harbor Blvd., near the corner for Katella. There's a little market there, and it's on the same side of the street as Disneyland Resort. The walk is perhaps 5-10 minutes, or you can take the ART.
Howard Johnsons is much bigger, and has interior corridors, and sits on Harbor Blvd, next to the 5 Fwy. They have a pool that was just refurbished, which includes a wading pool, a turtle squirting out water, and a jacuzzi. It's across the street from the DLR, and well within walking distance, I wouldn't even bother with the shuttle. If you get a room facing the DLR you could see the fireworks at night. However, if you get a room in the back, you overlook the freeway, and I've heard that you might hear fwy noise (I don't know if it's true, but I would just ask for a room facing DLR).
Although a LOT of people rave about the Candy Cane Inn, I would recommend Howard Johnsons. There are a lot of off-site eateries within walking distance of HoJo's, too.
Of course, this is just my HO.