The Sheraton Chapel Hill is really nice, it's where my family stays every time the come to visit. BUT it's not as close to campus as it seems, you have like a 10 min. drive to get there. I think they also have a shuttle service though. The Carolina Inn is literally on campus, but the money you save staying at the Sheraton makes it worth it.
Also... I highly recommend staying on the club level, the rooms are more spacious, you get free food, and more amenities than regular rooms