My wife and I are old school CP veterans, and would recommend to anyone that can afford it (peak season is quite expensive) that they stay on-site. You basically have three hotel options "on point" - i.e. on the peninsula. (There is also an RV camp).
Lighthouse Point is a very cool collection of cottages and cabins, most right on the lake. It has its own pool, with a convenience store shared by the RV camp. We've stayed in the cabins on a few occassions - they have a small bedroom with a double bed, and a living room with a pull-out futon. It also a kitchen with a 'fridge and microwave. It feels secluded, and yet you're just a few minutes walk to the park.
There's also the aforementioned Sandcastle Suites - an all-suite hotel - and the Breakers. We usually stay in the Breakers' Tower, which is the newest part of the Breakers (the original parts of the Breakers are, umm, somewaht "historic"). The hotel is right on a huge beach, has a TGIFridays, several pools, game room, etc., and is again just a few hundred yards from a couple different park entrances (if you stay there, use the "Magnum" entrance).
As already was mentioned, resort guests (and this includes those staying at the off-point CP properties Castaway Bay and Breakers Express) get into the park one hour early to ride certain rides. I have heard positive things about Breakers Express as a good value.
You mentioned you are looking at an August trip - many CP diehards look at the last week of August/first week of September (before Labour Day) as perhaps the best time to visit. A lot of area kids are back in school, the park is a lot less crowded (except for Saturdays), and the prices for the CP hotels come way down. They also offer packages that include park tickets that will save you money. You can also call 1-800-BESTFUN to have a CP Getaway Guide mailed to you; it's just a shell of its former self, but it does have a bunch of money-saving coupons in it.
Not enough info? Try:
http://pointbuzz.com/c/HeadingToThePoint.aspx
The trip planning area of PointBuzz, the leading CP site on the intertube. You'll find tips galore there.
My opinion? If the price is right, and the dates match, stay at the Breakers on the peninsula. If not, go the Breakers Express route. You'll save money, and still get into the park before most of the crowd (and won't get caught in traffic on the causeway). And you'll need every minute there - for those who have not been to "The World's Best Amusement Park" - and it is - the place is huge, and jammed with world-class thrill rides. But I suspect most of you already knew that ...