We stayed three nights at the Holiday Inn Titusville this past august. I would recommend this hotel highly. Nothing fancy, but very quiet and right on the Indian River across from the launch pads. Also very clean rooms and friendly staff.
I did not see any other fancier hotels in Titusville. I think you need to go to Cocoa Beach for more upscale hotels/motels.
The exit to the KSC is about a mile from the hotel...over the causeway about 5 miles and you're there.
We did not care for Cocoa Beach. Very congested, tons of hotels and restaurants on the strip. Very comercialized.
Hercamore