Craft beer in NYC is limited. Go for anything brewed by Brooklyn Brewery or Blue Point, there's a couple others but nothing too crazy. Southern Tier brewery is good too. Times Square is the Disneyland of NYC, no real " good " brew pubs but check out The Beer Authority on 40th and 8th by the Port Authority. That place was pretty decent close to Times Square.
It's a beer store, although they do have taps there. I was in NYC about a month ago for work and this place seemed to be the best to go to. Another good place which is closer to Times Square is Beer Culture and BarBacon.
Beer Authority is a good place to check out in that neighborhood. Not the best "bar scene" (tons of commuters/tv's/etc and that's not my scene) but it's hard to beat the selection on tap as they have 90+ offerings.
On another note, by all means, don't spend the bulk of your time in NYC around Times Square. Hit the East Village, West Village, Chelsea, Brooklyn, and so on.
There are plenty of good bars with excellent craft selections all over the city.
Anything is better than visiting M&M World and spending $15 on a Budweiser pint at TGI Fridays.
Wander over to the Ginger Man or Rattle n Hum and bring a growler back to your room. If you spend the bulk of your time in Times Square you are missing a lot. Hit the whole foods near USP and you'll be glad you did.