People have camped out on the Mall or the Ellipse, waiting in line to get tickets for the annual White House Easter Egg Roll and other special events. Aside from that, there is neither camping nor accommodations on the Mall.
There are scores of hotels, at all price ranges, in the Penn Quarter and West End, as well as a few in Capitol Hill—all within walking distance of the Mall. But given the great service to the Mall via Metro, it's reasonable to stay anywhere in the city or the close-in suburbs near a Metro station. Arlington, Virginia is particularly close.