We were in Granada on the Pentecoste Weekend and hadn't booked anything in advance. We found a couple of hotels with vacancies but the woman who runs Lima was so nice and so was our room--one of the bigger and more expensive ones (around 90 Euro; they showed us a smaller one for 40 Euro too). i think it was called the "aphrodisiac suite", it had a very modern bathroom and a big flatscreen tv, amidst a bunch of greek statues.
yes it's all kitschy as the Lonely Planet says, but super clean, and in a good location.

We stayed at Hostal Lima in late September and were very pleased. The rooms were very clean and small, but had charm. The balcony was nice. The location was also quite good, very close to the Cathedral. For 40 euro a night, you can't go wrong. The owners were very helpful. Underground parking not too far away, we paid 10 euro a night.

This is a great find. The place is spotlessly clean - it's more like a hotel than a hostal! It's right in the centre of town and the owner was so helpful to us despite not speaking much English. It's not the Ritz but would meet most peoples needs.

The Hostal Lima was the nicest place that we stayed during our visit to Spain. The room was beautiful, very nicely furnished and super clean. The owner, MariCarmen (I think. . .) was great. There is no elevator in one of the 2 buildings, and we were on the top floor! (Suite Caprichosa) But she grabbed one of our (fairly heavy) suitcases and dashed up the stairs with it. We arrived at the top a few minutes after her, huffing and puffing! She also said that she knew who we were by the sound of my husband's voice, which she recognized from phone calls. True or not, it was a nice touch, and who cares if the "antiques" are real or not, it's just a place to stay. We also had a miniature balcony.

The Hostal is located close to pretty much everything, meaning mainly the Alhambra. There is also a very nice "regular" (non touristy) shopping district directly east of the plaza where the Hostal is located, well worth checking out after being inundated with cheap souvenir shops.

We ate several times at the bar around the corner and made friends with the boys working there.

The Hostal Lima is an OUTSTANDING value for the money. We would stay there again and recommend it highly.