Cerro Alegre’s 
Hostal Casa Aventura (Pasaje Gálvez 11, tel. 0322/755963, www.casaventura.cl [1], US$11–13 pp) has rooms with high ceilings, burnished wooden floors, and one, two, or three beds, as well as two shared baths, and kitchen facilities. Rates also include an outstanding breakfast, with bread, fresh cheese, and fresh fruit; its major drawback, despite its charming location, is that it faces busy Calle Urriola, which gets lots of downshifting cars, buses, and trucks.
On Cerro San Juan de Dios, Villa María Antonieta (Bernardo Vera 542, tel. 0322/734336, www.hivalparaiso.cl [2], US$12 pp) is the Hostelling International affiliate; in addition to dorms, it has slightly more expensive doubles and triples.
Links:
[1] http://www.casaventura.cl
[2] http://www.hivalparaiso.cl