What do you plan on doing during your site seeing days? That will help determine whether you should stay in the same hotel, or split your stay. I'd recommend staying at a different hotel closer to the sites if you plan to see San Diego, for example, and then move for the Disney portion of your trip.
The So Cal City Pass is a great deal, especially if you only want three Disney days. I'd recommend at least that, but would probably add more if you are huge Disney fans. I'd also recommend doing Disney at the END of your trip, rather than to start. Everyone I know who has ever tried Disney first, then the other attractions after is always disappointed, because Disney is the highlight of the trip!
Staying on-site is nice if you can afford it, but if you can't, it is no big deal. It's not like at WDW where staying on-site is practically a requirement. At DLR, you can easily walk from the many hotels across the street. We like Fairfield Inn, Best Western Park Place and Candy Cane. If you are looking to spend less, the Desert Inn or Del Sol are also very close, and while they are by no means nice, they are a clean place to dump your stuff and collapse after a full day in the park! It just depends on what your priorities are.