As others have said, it depends on your family. We are a family of 5 and chose to stay at the Residence Inn for both I-Day and PPW. This was a good fit for us because we had a 2 bedroom suite, including breakfast (2 bedrooms, 2 bathrooms, a separate sitting room - with a sleeper coach - and a kitchen), for less than the cost of 2 hotel rooms. Plus, knowing we wanted to go for both I-Day and PPW, we really had to watch our budget.
The Residence Inn is close to Riva Road, nearer the mall area (plenty of hotels to chose from in this area), but not within walking distance of USNA. We parked at the Navy-Marine Corps stadium and took the free shuttle to the yard - on I-Day and PPW (I think I recall that no-one can park on the yard at these times, except if you have a handicapped pass). This was very easy and extremely well organized, with numerous shuttles running. We took a small backpack with drinks and snacks (important to think of the siblings), so that we could be flexible with our time. DS had one of the latest check-in times on I-Day (9:15am) and we ended up just staying in and around the academy and had a very pleasant day. During PPW we didn't use the shuttle service in the evenings, but drove our Plebe back about an hour before his liberty ended. We found that the trick to avoid a large amount of traffic was to enter USNA through the back gate (gate 8) - the same one the shuttle goes through. Remember that everyone over 16? must have ID to enter the yard - we did see cars having to unload passengers before being allowed to enter.
Re. t-shirts: We managed to get the white Class of 2014 (names listed on the back) medium t-shirt very easily from the Mid Store after his check-in. However, they were out of size small when we got there. Later in the day, we found that the USNA Visitors store (different from the Mid Store), had a different, gray Class of 2014 t-shirt (also with the names), for a couple of dollars more. As far as I remember, both these Class of 2014 shirts were only available from the day before I-Day, so probably not worth a special trip to Annapolis.
However, don't panic if you aren't going for I-Day, because they had another different Class of 2014 gray shirt available at the Mid Store during PPW, with plenty of stock, even on the Monday. We bought one from each visit and my middle son compared the lists and noticed that a few names were missing from the one purchased during PPW (the "no-shows", or ones who had already dropped out, I guess).
Re. hotels, many folks get really lucky using
www.hotwire.com I have used them successfully myself. I just checked and they have a 4 star hotel (with a pool, so it is likely to be The Westin) available during I-Day time period for $77 per room per night! However, the one thing that seems to get people about most of the hotels in walking distance is that you pay extra for almost everything (parking, internet usage, refridgerator usage - when there is one in your room), there is no breakfast included, and at some places, no restaurant either. Just things to keep in mind when you are deciding what is important for your group.
All the best!