Stayed here for a couple of nights in July. The guys at reception are great, but shame about the actual hostel.
The rooms are dark and dingy. The bunk beds squeak like crazy and are not very comfortable. The locker underneath my bed did not work (i.e. you could pull it open even though it was meant to be locked. There was only one power point in the 10-bed dorm. I think it was the same all round, since there were people in the hallways sitting next to their phones and laptops waiting for them to charge. Breakfast was some bread, and packets of biscuits. There was a woman guarding the cereal and coffee and I kinda felt guilty taking the food as she was there staring at me.
The showers weren't great - a cubicle with nowhere to hang or put your stuff so it all gets wet. The shower on my floor was really dark, can't remember if one of the lights were out, or if it was just like that. There also wasn't anywhere to get dressed after the shower because it's all so small.
The people in my dorm were great, but in the rest of the hostel there was It's a young person's hostel, everyone is around 18 and out to get super drunk. If this is not your scene, I would avoid this hostel.
One plus is that the location is good, just around the corner from the Prado and close to the mains squares and sites. Also it is cheap, but even if you are on a budget, I would suggest paying more to stay somewhere better.