I hate spending a lot on hotels, especially in such a cool spot where you will literally be just sleeping there. However, NYC is my one exception. Try to stay in the nicest hotel that you can afford, believe me it's worth it (especially with 4 people as NYC rooms are notoriously tiny).
My suggestion is the Westin in Times Square - very nice, clean. It's pretty new and it's actually very quiet for it's location (and it's a perfect location - right near all the shows and Times Square). Not the cheapest but they have some good deals running all the time.
Have fun. How can you not????