If you are looking for a cheap place that offers nice rooms and has a great breakfast included (pancake, eggs, bread, tea) look for this place!
It's a bit uphill, so you have to walk some stairs to get there (good exercise).
It's a quiet hostel, so don't expect a bar and lots of entertainment. It's basic, but clean and the owners are very nice and helpfull. I would recommend to all backpackers!

We've stayed quite a while in this hostal. Son and father working in this hostal are really nice and hospitable. They helped us out to call for a cab and to call the tour agency who was going to pick us up at 5 in the morning but they were a bit delayed. The rooms are spacious and the bathrooms are nice. It can get a bit cold in there during the night, but hey, thats Cusco!

Obviously a great view from the hostel, although walking up and down the steps several times a day can get tiresome. Hostel is very cold, with communal areas unheated and open to the outside through gaps in the windows.

Owner is very helpful and speaks perfect English, we booked a jungle trek through him which worked out pretty well, and the details of the trip were almost as described.

We had hot water about one third of the time.

My friend and I stayed here for 4 nights and loved it! The view of the entire city from the breakfast terrace is incredible. Its a few steps up to it, but its totally worth it!
The breakfast is great, pancakes, eggs, tea, orange juice and toasted bread.... exactly what you need to start the day to explore the beautiful city of cusco :)
The staff are amazing, the two woman that cook, clean and wash your clothes are lovely, and Luis and his dad (the owners) are awesome!!!! Luis speaks amazing english and is really cool!
There is even a huge wide screen tv where you can chill and watch a dvd....(they have hundreds to chose from).
The rooms are really clean and nice too, with a lock on the door, and the bathrooms always have toilet roll and hot water. It can get a little cold at night, but we were given a little plug in heater....amazing!!! Also there is free wifi and they provide towels. And even better its super cheap...11$ a night!
Ok so as you can see, we really loved this hostel and would highly recommend it, I have nothing bad to say about it......Definately stay and experience it for yourself!! :)