I was hoping someone could tell me if the Inn at Cape Arundel is worth staying a few days at? Do they have any cottage type rooms? Also, what neighboring towns are worth checking out without spending too much time in the car getting there?

If this is the one on Ocean Avenue in Kennebunkport (near President Bush), YES.

You may also want to check out The Maine Stay Inn & Cottages, also in Kennebunkport. They have get cottage accomodations.

A little further south, the York Harbor Inn , (in York Harbor believe it or not !)is a fantastic Inn, with some of the rooms having ocean views, four poster beds and even open fireplaces.
My wife and I stayed there last fall (mid october) and would go back in a minute.
The food and hospitality are first class as well.

They have their own website if you're interested - www.yorkharborinn.com

Have also eaten at York Harbor Inn and thought I'd love to stay there sometime. Charming Place, and great food. Just around the corner from there, perched right above the ocean in York Harbor is the Stage Neck Inn where we stayed. It's very nice, AAA 4 diamond, great breakfast buffet in morning (not included with room price), beach area, indoor and outdoor pools, great ocean views and lawn on which to lay and relax while viewing ocean. York is a cute little town with some neat historical sites to visit. We were glad we stayed there because it's a fairly quiet area, we visited Kennebunkport from there which is a short drive.