A short walk from Metro Cal y Canto, Hotel Caribe (San Martín 851, tel. 02/6966681, US$8.50 pp) provides cheap breakfasts and other meals, free luggage storage, obliging management, and Internet access, but other equally good, more conveniently located places cost only a little more.
Near Metro Los Héroes, Barrio Brasil [1]’s simple but cozy Residencial Vicky (Moneda 2055, tel. 02/6960787, www.residencialvicky.cl [2], US$9–12 pp) enjoys a more interesting neighborhood, but too many beds clutter some rooms.
Used mostly by groups and a steady influx of independent foreigners, the well-managed 
Hostelling International (Cienfuegos 151, tel. 02/6718532, fax 02/6728880, www.hisantiago.cl [3], US$11 pp) has spacious common areas, dorm-style accommodations (4–6 beds per room), cheap Internet on a handful of computers, and cheap laundry service. Its cafeteria has lunches and dinners in the US$3–4 range, the Saturday night asado (US$7 pp, wine and salad included) is a bargain, and it’s recently added a bar.
HI also has a second affiliate, Che Lagarto (Tucapel Jiménez 24, tel. 02/6991493, www.chelagarto.com [4], US$12 pp), directly across from the Los Héroes bus terminal. In an older building that’s been rehabbed, its atmosphere is more casual than the purpose-built Cienfuegos site.
Links:
[1] http://www.moon.com/destinations/chile/santiago-and-vicinity/sights/barrio-brasil
[2] http://www.residencialvicky.cl
[3] http://www.hisantiago.cl
[4] http://www.chelagarto.com