I live roughly half-way between Pearson Airport and Niagara Falls, and warn you that traffic will likely be horrendous. Although the drive is only 1:45 in light traffic, you will be driving both directions in *rush hour*, and that will be the likes you have rarely seen before. Allow 3 hours for your return drive, so leave Niagara Falls by 1:30 or risk the chance of missing your flight. 

Note that for part of the highway, both directions, there is a High Occupancy Vehicle (HOT) lane along the leftmost side. Outside of Toronto proper it is sufficient to have 2 people in the car to qualify, even though inside the city there must be 3 or more.

If you opt for the GO train service, I recommend driving to Oakville Station and parking your rental car there; it is likely the closest station at which you will find free parking available by the middle of the morning Rush, and is only 3 minutes off the highway. Heading downtown to Union Station will simply lengthen your commute to Niagara Falls to no purpose.

That being said, you will enjoy the Falls and can expect to have around 3 to 3.5 hours to enjoy them, in the best time of the day.