Yes DC rocks! We always stay in Olde Town, Alexandria. It's directly across the river from DC and a 7 minute cab ride to the Smithsonian or anything on the Mall. Alexandria is very quaint with lots of antique shops and nice restaraunts with outdoor seating. They even have a Moroccan restaraunt with belly dancers. We always do Smithsonian when we go to DC. However, remember it's like Disney you can't see it all in one trip so don't kill yourself trying. I've not been to a single one of the museums and not been completely blown away. My one piece of advice is to take the guided tours they are so worth it and you will get so much more out of the experience. Each museum will take an entire day to see properly. And of course the best thing is they're all free!!!! Your tax dollars at work for you.
Another thing I recommend is the theater. DC has some great shows. Our favorite theather group is Wooly Mammouth and they always have a show going on. We've also seen some shows at the Kennedy Center which have beem great (see Shear Madness there you'll love it!)
As far as the war memorials, they are worth a trip to and the WWII memorial is just simply amazing. It may make you cry.
If you go to DC plan on doing a lot of walking.
Because hubby and I never go anywhere we usually splurge on hotel so I can't recommend and lower rates but there is a great web site called something like "Alexandria the Fun Side of the Potomac" that has a list of all the hotels in the area. My one STRONG recommendation is to stay right in Olde Town.
I hope you go and I hope you love it as much as we do.