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I second the Villager Motel. We stayed there many years ago and were happy with it. Basic and clean accomodations with a good amount of space at a reasonable price. Our room had a queen bed, a kitchenette and trundle bed set for the kids. But keep in mind that it is in Barlett, just over the line from Glen. Stay away from the Storybook Resort. Though one of the closest hotels to Storyland, it is overpriced and run down.
If you have the time Diana's Baths is a short kids friendly hike with a fabulously beautiful payoff at the end. My kids whined that they didn't want a hike, but once we got to the waterfalls and running river, they didn't want to leave. The falls in Jackson are great too.
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