Unless you have a view of the Ball from your room (VERY expensive) being in a Times Square hotel on NYE is much more trouble than it's worth. You won't be able to step outside and see the Ball, as any exits with views will be closed -- you will be put out on a side street with barricades stopping you from heading towards a viewpoint. If you go out to dinner, coming back will require you to pass through at least 1 checkpoint where you will have to show your key, and that checkpoint might force you to go well out of your way to get back to your hotel.

We stayed at the 4 Points on 40th on NYE a couple years ago and we had checkpoint issues getting back to there from 9th! Crossing B'way to get to our hotel from a matinee required us to go a few blocks out of our way to find a checkpoint, too, and this was barely 5PM.