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Munich Oktoberfest in September? Who knew?

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Well, I booked a flight JFK - Moscow, stay a few days, then Moscow to Munich. Planning on staying a few days there and getting a car and eventually land in Switzerland.

Problem is, I booked Munich for arrival on September 16 with departure on 20th. Just found out that Oktoberfest begins on September 20th (Sunday) with people coming into Munich starting on Sat. That means that all the hotels' rates are insanely high.

I've finally found two hotels that are more than we ever spend but probably considered "reasonable". Carathotel on Lindwurmstr. 13; and Hotel Schlicker on Karl Mayer OHG. Both same price with same amenities. Average hotels.
http://www.carat-hotel-muenchen.de/en/welcome.php
http://www.hotel-schlicker.de/english/

Question 1 - Which would you say is the better choice as to location (actually might prefer to stay away from the Oktoberfest area due to noise), but yet want easy access to the center and railroad?

Question 2 - We will be getting a car on Sunday 20th (start of Oktoberfest) to drive out of Munich. Will it be nuts to rent it in the city and drive out, and would it be better to go back to the airport and pick it up there?

We will be heading south to Innsbruck.

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