My sister and I have taken the train up a couple of times for the Westminster Dog Show in February. Love taking the train - it's so relaxing. We leave from New Carrollton, MD - much easier parking and way less traffic than going to Union Station. By the time you pay gas, tolls, parking and deal with all the crap of driving, it's definitely worth it to relax and take the train. I forget which hotel we stay at, but it's walking distance from Penn Station (maybe 5 blocks in the direction of Broadway). I have a friend in the hospitality industry, so we get a fantastic room rate, so I can't help you out with telling you where to find good deals.
If you want to save money, you can catch one of the $7 buses instead of taking the train. (I think it's called the Bolt Bus, but a google search can probably find you several) My son and his wife have used it, with no complaints.
Have fun!