My husband and I stayed here three nights on our way to and from Patagonia. The private room with a double bed and private bath was a good deal at $50/night -- clean, cheery, decent-sized and had cable TV. We also stayed in another private room with a bunk bed ($38/night) that was literally size of a tin can. We didn't mind since we had an early flight out the next morning, but I can see how it wouldn't be ideal.
The hostel is within walking distance to the Central Mercado, Plaza de Armas and Santa Lucia. There are laundromats, a supermarket, Internet cafes, restaurants and good cafes all within blocks. Breakfast was simple and served in the basement. There's a nice lounge area to just chill out, surf the Web or play pool with other guests. There's also a cool local restaurant across the street that offered ice cold liter-sized beers and piping hot cheese empanadas. Yum!
One last note: the service here was erratic -- the English-speaking staff was either super friendly and helpful, or they couldn't-be-bothered. It depended on the time of day. We were lucky to get one young guy who helped us with some travel planning, stored out luggage, gave us advice and called us a cab when we needed. Overall, it was a good experience and I would return here.