As I'm sure you know there are thousands of hotels in New York city, and eveyone has their own opinions aswell as requirements from a hotel not to mention different budgets, so I don't think you'll get a definitive answer of 'the best hotel'.
However, personally I think that staying in Manhatten is preferable to staying elsewhere within New York (or New Jersey). There's nothing like the thrill or convenience of waking up in Manhatten, plus no added travel time.
I have stayed at the Milford Plaza
http://www.milfordplaza.com/app/webroot/insidertraveleroffer/GPPC/?gclid=CL397pfiwLQCFSbMtAodei4AUA which I would recommend. It is just one block from Times Square, so very convenient.
I would also NOT recomment the Pennsylvania (Penn) Hotel. It is in a convenient location near to Macys, but I felt it was a bit dowdy and not very secure, there seemed to be all sorts of people roaming the corridors.
What ever hotel you do choose I'm sure you'll have a fantastic time!
Oh, and if you haven't decided on flights yet then have a look at those going to Newark aswell as to JFK. The travel time into Manhatten is about the same and gives you more choices of flights.