We would like to pick up our rental car at Dollar Car in Union Square so would like a hotel in the vicinity. Can any one recommend a decent hotel in the area?

What price range are you looking for? What type of hotel?

My favorite is the Hotel Monaco -
http://www.monaco-sf.com/

Dollar is within a block of the hotel.

We stay at The Mosser. Small, austere but clean rooms, great location and terrific prices. On Fourth St, just off Market and a short walk to Dollar [we get our cars from there too]

www.themosser.com

They have some rooms with hall bathrooms, but they also have rooms with private baths.

Depending on date, rates can be a real bargain.
We got a weekly rate for Jan for $75 a night [queen deluxe with private bathroom].

They have a special now for $99 a night with free parking, but have to call direct for it.

There's every level (and consequently, price) of hotel nearby, from the Mosser (as described by Debit) to the JW Marriott and others of its ilk. Also, if you're "game", I understand Priceline works very well in San Francisco.

The Hotel Rex, a Joie de Vivre property.

www.andrewshotel.com
I've stayed here twice and liked it a lot. Sent another two, different friends, more recently who thought it was good too. It gets very mixed reviews though, but my experience was more than decent for a value price and excellent location.

If you are a veteran the best deal in town is the MARINE'S MEMORIAL HOTEL.

Great price, excellent staff, good rooms, includes breakfast and free happy hour. Check it online by search. Cost to join for 1 year is $100 donation and they have reciprocal clubs all over the world. Easy walk to Union Square area. One great benefit for having served in the military.

Ditto to PeaceOut. Something just so civilized and friendly about the Rex. We have stayed there twice.