It is really a personal preference. I prefer the Bahn because I no longer have the fascination I had for cable cars in my youth.

There are a good range of hotels in the midst of town but rates may still be a bit high. We typically stay out of town; my family towards Mittenwald but my preference is currently the Riessersee. For a first visit and with no car I definitely suggest finding something in town, and any half decent hotel booking site will give you a good variety.

Again, I often fly MUC-FRA if I can find a decent fare and if I am flying onwards from FRA. I don't like driving that stretch as it can vary a lot with traffic. So if you can save some time by flying it may help, but you still need to factor in all the travel ie between Garmisch-Partenkirchen to MUC will take you time plus all the usual airport formalities.

We can only give some guidance; ultimately it is up to you and your personal preferences and how much you feel you can squeeze into a very short amount of time. For me that is a very tight agenda. To give you an example last summer friends came to visit and we drove to Salzburg on the Friday, then on a Sunday from Salzburg to Linderhof to Oberammergau with only a pit stop in Garmisch-Partenkirchen and back to Munich. That was an extremely long day taken up more by travel than by doing things. So you need to determine what you value most and then make that decision.

Best of luck!