Well, as someone who has stayed at the Candy Cane Inn on multiple occasions- I think it's great, and I've stayed at most of the hotels in the area. I've recommended it to most of my friends and they have also given it strong reviews...and these are all people w/ small children who have just braved a 10+ hour car ride to get here...so a comfy hotel is a must before hitting the parks. Up until last year I lived in Nor Cal until I decided to move to Orange County to be closer to Disneyland...well, that and my job.
Obviously it's ultimatley about personal preference. I like the Carousel as well but I just really prefered the Candy Cane. As a mom to small children I like my car to be close to my room so I can quickly shuttle all their necessary items back and forth. The rooms aren't large but if I can set up a pack & play and still have room to move about I'm in good shape. Also, after travelling a lot in Europe I've come to rethink what my definition of "small" is when it comes to rooms and bathrooms.