The other *wood properties downtown are category 4. Despite its shortcomings, the Sheraton does have good location...so if you are planning a visit downtown, and using points, you don't have much of a choice. BTW, the Westin Michigan Ave is also cat 3...but from discussions on FT, the reviews are mixed. Location is also pretty good. You might wish to search for previous threads and make up your own mind re that property...
I will not pay to stay at the Chicago Sheraton, but for 28,000 points, it might be tolerable.
If your visit will include a fair bit of visit to Chicago suburbs, consider the Westin O'Hare.