I cant help you out about housing since I live in Columbus (hence my clever handle on here) but I booked at a hotel which is only 70 a night and its downtown. Now I cant vouch for quality of said hotel or the neighborhood but as a young alum my situation is not too different than you guys. This is the hotel I booked at if you are interested (its like a mile or two down from the Q so you can get a cheap cab ride). 70 night isnt bad especially if you have 3 or 4 and you dont care about sleeping on the floor
www.dcparts.com/university/index.htm
I know you've rebooked, but I stayed here with my fiance in 2010 when we needed a hotel last-minute that would rent a cheap room to two under-21 kids, and it was adequate but far from luxurious.
In 2011, we got a Hotwire Hot Rate for the Crowne Plaza for $54 a night, which was tremendous for location, amenities, and price, but I see it's in the process of being gutted and redone as a Westin.
Glancing at list pricing for hotels in the area, downtown is a bit pricier, but allows you to walk everywhere you'll want to go. Keep parking in mind as you shop around or Priceline, many of these hotels will charge you an arm and a leg to park, and you'll probably be better off parking in a public garage nearby. Somebody here gave me a tip on that for 2011 -- McKinney, maybe?
Another option, if you want the dirt-cheap room, would be to stay at the University Inn and leave your car there (parking was free when we stayed, but I'd double-check) and take the HealthLine bus rapid-transit line downtown. Stops right outside the hotel, then get off at 4th and Euclid (right by Zocalo for the pregame bash) or Tower City and walk to the Q. $2.25 a ride or $5 for a day pass, certainly much cheaper than parking pretty much anywhere downtown. I haven't personally ridden it, but I've heard good things, and it does run 24/7 -- every 15 minutes or more frequent during the day, every 30 at night (11p-5a) -- so even if you close out the bars, it will be running to cover the mile-and-a-half down Euclid.
It's a great event for a really affordable price -- hope you all have fun. I'd highly recommend the Zocalo pre-game bashes, lots of great (and free!) food there. Also highly recommend Dave's Cosmic Subs on 6th. Stumbled upon it last time I went to the tournament, loved the food and the vibe. The place would be totally at home on Court Street (and the guy who was in there when we went was an alum - not sure if he was the proprietor or not, though).