We used Khayyam in December 2012 during holidays in Iran. Overall this hotel is ok for the low price, but don't expect much.
We stayed in a double room, which was ok for the reasonable price. The interior was bland, pretty much worn down and the bed mattress wasn't great, but at least the room including bathroom was clean. Heating was good, but perhaps too good and we couldn't find the control dial that we had to open the window to cool down the room a bit. There is no wifi in the room, so you have to go to the lobby for Internet.
Breakfast is very simple: bread with butter, packed cheese, and tea. The people at the reception were helpful; we exchanged currencies (though the rate was more than 10% lower than in the city) and also purchased domestic air tickets, too.
The hotel is located in the car-parts district in the city center, about 10-15 minute walk from Imam Khomeini Square. It might be a bit difficult to find on the first attempt, but you won't get lost afterwards. It seems like there aren't many places to eat nearby, so you would probably need to take a taxi for dining out.More