We just went to DC over Labor Day and had a GREAT TIME showing the kids the monuments, museums, etc. Details:
We stayed in the Residence Inn on Vermont St, which is 5 blocks from the White House (simliar distance to Smithsonian, etc.). The McPherson Metro Station is about 1.5 blocks away, making this a very good location. We "won" this hotel on Priceline.com for only $50 per night, which was great considering they also serve a free breakfast (eggs, waffles, fruit, everything). The CVS on the lowest level sells basic groceries, so we were able to cook in our kitchen. We found food in DC to be very high, so we were glad to have ways to stretch our food budget.
Two downsides to this hotel: 1) no swimming pool. 2) We had the smallest room, which included one very comfortable queen sized bed and an L-shaped sofa that pulled out into one generous single bed. Our tiny 8=year old was able to sleep on the non-pull out side, but it wasn't any too big for her. If we stay there again, I'll either get her a roll-away, or I'll pop for the larger suite.
We originally had reservations at the Crystal City Marriott, and I think it would've been a good choice.
We flew into DC and didn't have a car. I'm glad we didn't. I believe parking at our hotel was $20/day, not to mention traffic and parking fees elsewhere. Our feet were our main mode of transportation, but we also enjoyed the Metro. If you fly into Dulles like we did ($40/person tickets on Independence Air), use the Metro Flyer system to get yourself into DC -- excellent service for a very good price.
One day we did the Tour-mobile bus thing, which I'd rate as mediocre. Some of the guides were really great -- very informative, throwing out trivia game-show style, really entertaining the crowds . . . one guide, however, was just plain evil. I just wanted to get away from her! We waited way longer than I thought was reasonable for busses to come along (more than an hour at one point). If you do this, buy your tickets ahead of time on the internet; they're cheaper.
Best meal we had: Hard Rock Cafe
Best cheap meal: Food Court at Union Station
Best snack: Lemon ice at the Zoo
Favorite museum: Natural History (kids begged to go back a second day . . . okay, kids if you MUST return to the museum)
Least favorite stop: White House Visitor Center
Favorite monument: George Washington
Prettiest stop: National Botanical Gardens
Biggest surprise: Being searched when entering every museum
Best advice I can give: Comfortable walking shoes