If you choose solid color or patterned drapes to match the shade of your air conditioner, it will blend more with the surrounding environment when the drapes are open. For example, if the air conditioner is a bone color and the walls are green, then choose draperies with bone as either the background color or the predominant pattern color. Floor-length drapes will completely hide the unit when it's not running.
If colors in the room clash with the air conditioner, then you need more than draperies. Hang a layer of sheers behind the draperies. When you turn on the a/c unit, open the draperies but leave the sheers closed. Thin sheers will only have a minimal impact on the airflow, yet they do a nice job of hiding an old air conditioner. However, if you have a reverse cycle air conditioner, do not leave the sheers closed when you turn on the heat. Sheers are not fire resistant.
Roman shades fit snugly inside the window, generally with a 1/4-inch clearance on each side. Choose from many colors and designs to bring the line of vision up to the curtain and away from the air conditioner. Roman shades offer privacy and energy efficiency even when the air conditioner is running. If you have a newer air conditioner that's flush with the inside of the window, then you probably don't need extra length to hide the a/c unit. Otherwise, calculate how many extra inches you need when providing measurements to the sales person.
Improve energy efficiency, which lessens the load on your air conditioner, by purchasing thermal draperies. They have an insulation layer, also called a vapor barrier, which lessens the exchange of inside and outside air. You can buy both Roman shades and full-length draperies with thermal insulation.