I really liked Madalena. After the initial difficulty of finding it I really had a wonderful experience. The rooms are pretty basic, mine with a mini bar that didn't work, but they stay cool when it gets hot and most have wonderful views. Bathroom facilities basic again but clean and functional, and staff are lovely. The breakfast could be improved upon, and the climb from town is a killer when it's hot, but really a great stay overall.

I loved this place!
The views were stunning, and the staff was most hospitable.
It is a trip uphill if you walk from town, but it is not that far and I'm old and gimpy.
The rooms are simple, but are very cozy as the temperature rises the room stays cool.
Bath and shower were small but functional and clean.
I loved it.

Pluses:
+ great views from most rooms so make sure you ask for a room with a view. Some rooms do not have a view at all but others are fantastic (you can take a nap looking at sunset colors through your bedroom window)
+ good location (transportation on the island is a problem especially at night where it is impossible to find a taxi)
+ free mini-van transportation to/from airport. You must explicitly ask for this. The reception will not inform you about it on their own

Minuses:
+ a bit of an uphill return from the city (the downhill is ok)
+ forget the pool – hit the Mykonos beaches instead
+ rooms are very basic. Mykonos is not for staying in your room so … get out and have fun in the city & beaches
+ ask for anything additional at the reception – they will not provide it on their own, but they do respond positively to additional requests

If you are on Mykonos time (party, beach, hanging out in the city), then this hotel is great as it provides the basic necessities to your trip. If you are looking for a more luxurious accommodation, then this hotel is not for you.

We stayed in this hotel for 3 days; the booking was done through Santorini Mykonos website (who claims it is a travel agent)
The booking was done in May from Australia through this site and paid for three days accommodation. When we arrived at the Hotel we were thoroughly disappointed in Australia this kind of hotel would never get any star rating. We checked in we were told that we have pre paid in full and that we would be charged for only for the extras which is fair enough. But when we checked out the receptionist said there won't be any extras that we had to pay. But the receptionist asked me to sign a credit card slip saying that they don't have any signed documents for the payment we have already mage through the agent Santorini-Mykonos website. But when we came to Australia there was another charge on my credit card in addition to the charge made in May 2006. I am still in the process of disputing the transaction. Travellers, beware not to pay for this hotel never in advance and if you paid in advance never site your credit card and never ever sigh any documents as THEY ARE THE NUMBER ONE CHEATS IN GREECE.