Treasure Island is right between San Francisco and the East Bay, which means that you can stay either in SF or the East Bay. I’d recommend SF hotels, as it’s the free bridge direction and a little more fun.
The SOMA neighborhood is the closest area in San Francisco.
Soma hotels I like (one moderate-high, one low price):
1. The Intercontinental: Higher end price range. Very good service and amenities. http://www.intercontinentalsanfrancisco.com/
2. The Good Hotel: One of the best deals in SF. But a nice, clean “green” hotel. http://www.thegoodhotel.com/
If you wanted to do East Bay, Emeryville is the closest city.