As others have said you will sail from the Embarcadero which is in the City and very near Fisherman's Wharf. It's one of the best locations in the world for cruise ships to dock -- bar none.
Hotels parking restaurants everything in SFO is expensive, but its a great city. There is great transportation with the cable cars and there is a new shuttle along the Embarcadero.
If you have time, by all means take the ferry to Sausalito (the very best tourist value in America today) for lunch or dinner, and have a glass of wine and a wonderful Crab Louie at Scoma's or the Spinnaker!
As for a hotel near the waterfront, it is still hard to beat the dramatic interior of the Hyatt Regency, Embarcadero Center.
Come on, it's only money