My Aant and I traveled to Granada, and based on the reviews that I read here, we decided to stay at Hostal Arteaga.
The room was quite a bit smaller than it looks in pictures, but it was clean, and had ac!! The ac was very good, it cooled the whole room down with no problem. The bathroom was small, but clean and serviceable. They don't provide soap, but they do bring clean towels, clean the room, and make the beds every day.
Additionally, if you stay 3 nights, you get a free spa treatment! The spa is small, but very cool! We very much enjoyed our spa treatment, and who can beat free? :)
Many reviews complained of noise, but we had a room that faced the court yard, and it was extremely quite.
This hotel is located very near Plaza Nueva, and transportation to the Alhambra. The front desk will even arrange tickets to the Alhambra for you at no extra cost. My one caveat is that only one or two of the front desk staff speak English. If you are not very good with spanish, this may cause a bit of an issue, but it's not insurmountable.
I highly recommend this hotel as a place to stay in Granada.
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