We stayed in Hostal Costa Azul twice (with a break in the middle for a trip to Las Alpujarras) and enjoyed it both times. The first room we had was a double on the second floor with a decent sized bathroom. The room wasn't huge but it was clean and definitely offered value for money (we paid €50 per night).
We came back to Granada for one night after staying in Pampaneira and were given a different room. Initally, we were put in a twin room (despite having booked a double room) but when we asked to move to a double, we were offered a stay in an apartment across the road as there were no double rooms available. The apartment was okay, although I would have preferred to stay in the room we had during our first visit. There was a double room, sitting area and bathroom. However, the aircon was in the sitting area and so didn't cool down the bedroom as much as I would have liked.
The location is great, very central but on a fairly quiet street. However, 30metres to the end of the road takes you to a strip of fantastic tapas bars (we much preferred the ones at the other end of this street though). Marisa was a great host, answering our queries and offered for us to keep our big bags at the Hostal whilst we travelled to Las Alpujarras. Before we arrived, she emailed us some maps of Granada, directions to the hostal and advised us to buy our Alhambra tickets in advance. My only (minor) complaint is that there was no soap in the bathroom. Having said that, it wouldn't stop us from staying again!