Plus, the majority of the stuff people travel to Munich to see is located in a relatively compact area, easily navigated on foot (for the most part). Theresienwiese, the large open space where they hold Oktoberfest, is a little outside the historic core, but easy to reach by public transportation.
I've stayed in Munich a few times, at a different hotel on each occassion. My favorite is Hotel Bayerisherhof by far, but don't even consider it unless you're traveling on an expense account. The best balance I've found between cost, comfort, service and location is Hotel an der Opera. As the name implies, it's very close to the National Theater, the Residenz, Marienplatz, Odeonsplatz and the southern tip of the Englischergarten. And, right around the corner from the Hofbräuhas.
If you're traveling during Oktoberfest, book your room ASAP.