Yes, I prefer to stay in the park, but understand your situation. West Yellowstone would be my choice. We have stayed at the KOA in West Yellowstone a few times and enjoy it. Just give yourself an extra 45 minutes to get into and out of the park each trip. West Yellowstone is a nice resort community and the scenery driving into the park is great.
The main road in Yellowstone is shaped like a figure 8. We usually explore the top loop for a day or two and the bottom loop for the same amount of time. Excursions can be taken from each of the loops. Enjoy your trip!