Having never been to Bangkok, I was expecting that all the places in this area were seedy and run down. Was pleasantly surprised with the Fortville Guesthouse. I stayed in a standard double room, which was a bit cramped but clean. Hotel staff were very friendly and spoke English well enough. You get 2 complimentary bottles of water as well as 1 hour of Internet use free (40 baht/hr after this, I believe). There is a luggage room with lockers for your valuables - very important when staying in Banglamphu! (Bring your own padlock) I did not get to try the coffee shop on the ground floor but it looked decent enough.

The downside: The bed was a bit hard, your view is likely that of the 7-11 and gas station next door and you do hear noise from the street, especially in the morning. But this is one of the better places you'll find in this area, for sure way better than the ratholes located closer to Khao San (If you do wanna venture over there, it's only about 5 mins away).

Nice located. Little bars and eaterys close by. 10 mins to kho San road. Crazy lift in the hotel. Rooms have tv and are comfy. Good choice.

Stayed here for 3 nights in July 2011, and thought it was perfect.
A short walk to the Khao San, so close enough, but without the noise!
Room was very clean.
Room was pretty small, although enough space for bags and walking around.

Definitely recommended as a nice cheap hotel in Bangkok if you want to be near the Khao San and Grand Palace.