I went this summer and stayed at the Sheraton Meadowlands (new jersey). The main reason for staying there was because I was going to see a show at Giant's Stadium which was on the other side of the interstate. The price was reasonable and even though they messed up on my reservation, they were quick to fix the problem. (it is not far from the island; you just need to cross the same bridge that they did in the godfather part 1 and you're there)
Major advantage: I didn't want to drive on the island and worry about parking/traffic/etc.. so this place had a shuttle that brought you right to the NJ Transit trains. From there you took a short train ride and were dropped off at madison square. In all maybe 25-30 minutes into and out of the city. When we wanted to go back to the hotel, we called the shuttle a bit in advance and requested a pickup at X time from the train. We did this for three days and were never left stranded.
The beauty was that my car didnt move until the time we checked out.
Shuttle -> "Free" with hotel
Train (round trip 2 adults) -> 11.50 X 3
Metro Card (it was nice most of the time so we walked where we needed to go) -> 7.50 (one day "fun-pass" with unlimited usage)
We only needed the metro pass for one day really, so it came out to 50$ in transportation for 2 people over 3 days.
I recommend this approach because we were able to spend more time seeing the sites and shopping and there was virtually no stress. Hope this helped..