I can't overstate how good this place is - all the comforts of a really good resort (pool, deck chairs, sauna, hammocks on the balconies, private rooms if you like), combined with the friendliness and feeling of community which is the heart of a good hostel. The owners go out of their way to help you out, the little restaurant provides great breakfasts (wonderful local coffee), the beer fridge is open to you at any time (honesty system) and all of this in a spectacular location overlooking the city.
If there is one weakness of the place, it is that it's about a 30 minutes walk from the town centre. However, if you'd rather not have the exercise, taxis are not exactly expensive, and as the place is priced so incredibly, it's not hard to justify staying up here in this wonderful spot.
Be aware that this IS a hostel, with all the fun that goes along with that (obviously no room service, and can get rowdy on the weekends, especially as there is a bar). But embrace it and you will have a fantastic stay.
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