Two of us are traveling to Spain and Portugal in Late September. I realize it is a matter of preference, but if you had to choose one city for an overnight due to time constraints, which would you choose between Salamanca and Toledo instead of doing just a day trip? Both sound like great experiences. Thanks!

If the choice is between Toledo and Salamanca than go to Toledo.
If you have time for both cities and the question is which one to do as a daytrip and which as an overnight, than Toledo as a daytrip and Salamanca as overnight, since it's much further from Madrid.

We tentatively planned on 4 nights Barcelona, then three nights in Madrid (including day trips) then one overnight to Toldeo, then head down to Granada for three nights, then 4 nights in Sevilla (including a day trip to Córdoba) before heading on to Portugal for an additional 11 days. We might trade the night in Toledo for one in Salsmanca.

With this itinenrary I don't think you have time for Salamanca. 3 nights in Madrid including daytrips is very short. I'd rather go for some of the places closer to Madrid(Escorial, Avila, Segovia, Valle de los Caidos, Aranjuez, Alcala de Henares,etc).
Cordoba deserves a night at least!

How are you doing this trip? If driving then Toledo as an overnight between Madrid and Granada is fine. If by public transport then add a day to Madrid and do as a day trip. Forget Salamanca it is not on your route and too far from other places for a day trip.
Yes I agree. ..Salamanca is a beautiful place but out of your way, and you don't have time for it....

I welcome all of your advice! I guess we could make a long full day tour to Salamanca out of Madrid, or take the 1 1/2 hour fast train to the town and spend one night. However, we won't be driving, so perhaps to allow more time in and around Madrid we should eliminate Salamanca. We can't do it all!

If you're really so hooked on Salamanca(and it's really a great city) why don't you spend 1 day less in Portugal?
Since Avila is on the way to Salamanca you could do this:
Train to Avila in the morning and after a full day sightseeing continue to Salamanca in the evening(it takes 1 and a half hour). Salamanca is very beautiful in the evening and you know in Spain life is really going on late into the night, normal dinner time is 10pm. Next day stay in Salamanca as long as you like and return to Madrid for the night. You could also squeeze in El Escorial to the first day since it's on the railway between Madrid and Avila. In the moring you can see the Escorial palace/monastery and in the afternoon check outs Avila. That said Avila has enough sights to spend a full day.