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Donauinsel (Danube Island) is a long island which separates the Danube River and the New Danube in the northern part of Vienna. It is a popular weekend and afternoon destination for the locals, good for cycling or jogging, and also the location of various concerts, festivals, and other open air cultural events. Donauinsel is more than 20 km long, though the area around Donauinsel U1 Station is probably the most popular (thanks to easy access and infrastructure).
You won’t find any hotels directly on Donauinsel, but there are a few hotels nearby. If U-Bahn access is important for you, note that practically all of the hotels are closer to one of the other stations than to Donauinsel Station.
The two stations on U1 adjacent to Donauinsel Station are Kaisermühlen/VIC Station (near Vienna International Center, also known as VIC or UNO City) and Vorgartenstrasse (on the way to the city centre).
The best location for accommodation still very close (2 stops) to Donauinsel Station is Praterstern, one of the largest train stations in Vienna, an interchange metro station, and the gateway to Prater Park.
Even more hotels, of course, are available in Vienna Inner City.