Driving to Granada

What do you want with 'best'?
Why would you want to increase your journey times by at least an hour each day to and from the sites you want to see and try to work with the train schedules which are likely not suited to you, the tourist?

As I recall, Granada doesn't have a subway or commuter rail system. It is not even well served by regular RENFE rail. Of course you could stay in an outlying area and take a bus in. But you might have better luck either parking in a public garage in town or in a remote public lot outside the city center for the duration of your stay. Weigh the costs of parking with the costs and time of commuting.

I think staying outside of Granada would be a little tough as there aren't regular trains in. I'm sure there are busses, but this would add a lot to your time. I would either stay in town, where ever you like and park at a garage away from the hotel (most hotels can recommend one, some probably have deals), or look into staying on the Alhambra hill. I think the parador (super expensive) and maybe a few other hotels up there have parking.

We stayed in the center and parked in a garage the whole time. The hostal we stayed in wasn't expensive and everything we did was walkable. I'd suggest that over staying outside of town.

I don't know from where you're coming that might necessitate driving. If this the same trip you've been planning since February, then is this a firm decision? If you have the car for the purpose of visiting other towns not served by rail, or making lots of stops en-route, then I would go ahead and drive into Granada with same car. Make sure that your hotel registers your car at check-in, so you don't get a ticket for driving into the controlled zone (see p. 577 of Rick's Spain book).