I LOVE Munich. I've been there several times, including one for Octoberfest. I've also spent a week in Augsburg, which I feel is worth a day trip.
For Munich
1) I've stayed near Karlsplatz a few times. Good value IMHO
2) Ulm is a bit of a cool city, the church is massive and might be worth a trip
3) I loved Nördlingen. Most definitely spend a day there.
4) Get a "Bavaria Ticket". Great and affordable way to take the train
5) I usually stay in cheaper hotels, but I like Hotel Demas City . It is located reasonably close to the main part of town. It doesn't have a lot of amenities, but is affordable and clean. I've stayed there 5-6 times. Good for stumbling to a few beer gardens.
6) The butcher shops in the Neumarkt have great food/beer. The Weisswurst (before noon) and the Leberkasse are to of my favorites.
7) The beer gardens are a must. Augistiner is my favorite. An "En Masse" and a SchienAxle is my favorite food in the world. But the Paulaner beer garden/brauhaus have the best beer IMHO. However, beer in Munich is second to only Czech beer (to me), so EVERYTHING is good.
8) Make sure to get the proper train ticket and have it validated before entering the train. They love to prey on tourists and have undercover cops who will come around and check them. Do some homework and you will be fine.
9) Hofbau haus is touristy, but definitely worth a visit.
Let me know how I can help. I've been to Europe 20+ times in the last few years, and Munich is likely my favorite city. Outside of Sicily, Bavaria is my favorite region in Europe.