Hi there Stephanie,
There are several great Disney-approved hotels located in the area, but if closeness is your top priority, then I highly recommend the Anabella Hotel which is a quaint mission-style boutique resort located just across the street from Disney's Paradise Pier Hotel and a short 10 minute walk from Downtown Disney! All you have to do is cross over Katella and head down Disneyland Drive until you happen upon the Grand Californian Hotel. Once inside, you can follow the signs to Downtown Disney and from there it's a short stroll to the esplanade which leads to either Disneyland or California Adventure!
If you do decide to book at the Anabella, I actually prefer the Mission Suite room option to the standard room. The Mission Suites are decked out with hardwood floors, nice furniture, granite bathrooms, and many even have private patio areas! The house restaurant Tangerine Grill is very good as well!
Be sure to check the special offers section of the Anabella website, as they periodically offer a "4th Night Free" promotion!
I also want to urge you to check out
Disney's Paradise Pier Hotel as an option! I have found the rates at this Disneyland Resort hotel to be comparable to those offered at Good Neighbor Hotels and the service and quality you receive from Disney is unmatched!
Best Wishes,
Amanda F.