I have a 5 acres north of town. I've stayed in Craig a lot and really like the town. Everyone is very snowmobile and hunter friendly and aren't as snooty as (most, not all) in Steamboat. Not trying to start a war either, just my opinion.
The Holiday Inn on the west end of town is nice for its age and has an indoor pool and hot tub. The Best Western is across the street and newer, but no pool that I know of. Both are clean. The Super 8 is in that area too, but not nearly as nice.
I've also stayed at the Elk Run Inn. It's cheaper and nothing fancy and I hear the road more than the Holiday Inn, sorta like the Rabbit Ears motel in Steamboat, but half the price. The owners are very nice and even allow pets. It's next door to City Market and walking distance to Taco Bell. I don't know anything else about the other Mom and Pop's in town.
I will be up at the Freeman trailhead in a camper and sled deck this weekend with the wife and kid. If you guys are going up this weekend, send me a PM and I'll give you my number.
The Golden Cavvy or Back Woods Diner are good for home style Breakfast, Carellis is good Italian and Pizza. There are also a couple of fair Mexican restaurants.