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Fraley House Bed and Breakfast - they are about a mile out of town. A wonderful couple run it; besides great hospitality and a delicious home-cooked breakfast, they are a terrific source of information about Denison and the Granville area. Will pm a link, as I don't know if I'm allowed to post.
For food right in Granville, Brews for burgers and beer, Whit's a couple doors down for the best frozen custard in the world. Easton, an upscale outdoor mall, has other upscale dining options if you feel like driving 30 minutes or so towards Columbus. Newark, east of Granville, has more common chain restaurants - Olive Garden, Applebee's, that kind of thing.
Fraley House is about 1 1/2 miles from Denison. We have walked it before - but more for fun than for practicality. Warning - she books up quickly though.
If you don't stay in Granville, the next best place to stay is in Newark. The Marriott Courtyard is closest, but there is a Hampton Inn and Longaberger Hotel called The Place Off the Square. We got the Courtyard for $50 on Priceline recently, that was a steal.