I missed the question about the hotel. The San Luis on Seawall Blvd is the finest hotel in Galveston. If you're looking for more affordable digs there is a Howard Johnsons that is the closest hotel to the pier I believe. They offer free parking for those driving, the whole week for just one night of paid accomodations. I was hesitant to recommend it since you don't really think a HoJo's could be very nice. My parents wanted the free parking so last time they left from there they left my house a day early and stayed there. Said it wasn't bad at all, better than they were prepared for. There is also a Holiday Inn with the same arrangement but I don't know off hand which one.
If the San Luis is not out of line with pricing for oceanview (gulf-view, which ain't that great unless you like brown water) it's a really nice place.