I guess this really depends on your preference. When I go to WDW, I usually prefer to stay off site. It's cheaper and there is more to see in those immediate areas. I prefer staying in Kissimmee during those stays, but I have stayed on WDW property twice.
Disneyland is a whole different story. If you are going to be immersed in the Disney experience, then you should stay at one of the DLR properties. I have stayed at the DH and PP several times. I haven't stayed at GH yet, but that will come in 2005.
I prefer on site because everything is so close and convenient. For me, the best experience is hopping on a monorail at the DH and being dropped in the middle of Tomorrowland. I also like walking through Downtown Disney to get back to my hotel. Though I must admit that it is quite a hike back to Paradise Pier.
The surrounding motels are outdated. Sure they offer a lower price, but where's the value? If you are spending money on a memorable Disneyland vacation, why not spend a few extra bucks to stay at the property. When you stay off property, you are just staying at a strip-style motel from the 60's.
Of course the bigger hotels are nice. I stayed at the Anaheim Marriott last year for a conference and our company rented DCA for a private party. It's a very nice hotel. But in this case, if you are going to spend the money, you might as well stay at DLR.