Park the car somewhere, take the bus in and stay in the city. The price differential in accommodation is not worth the daily hassle of going back and forth. There have been several threads on this fairly recently. The Shewolf's and JoefromChicago's are the ones that spring to mind.
I personally don't like to stay much past 35th, and prefer to be south of 20th, but it depends on what you plan to do during your time in the city.
New York magazine recently published their annual cheap eats issue. It's available online for browsing/planning.