Arco Iris offers it all - a great location right in the action at an unbeatable price. At $42 a night per couple for a basic room you really can't find anything better.
We stayed here over Christmas-NYE this past December. The posada offers lounge chairs at no cost to their guests on the beach infront of the hotel. This little spot is nice because it is less crowded than the public area where all of the cruise ship visitors go. The rooms are basic but they include a fridge (which is nice if you want to keep cold beers/wine in the room for cocktail hour on the porch). The beds were the only thing that weren't great. They were pretty old and since the rooms don't get direct sunlight the matresses were a bit damp.
Overall if you're not fussy about the little things you'll be very comfortable here.