The standout feature at Hostal Resbalosa (Resbalosa 494, tel. 084/22-4839, www.hostalresbalosa.com , US$16 d shared bath, US$22 d private bath) is the sweeping view over the city from various sunny terraces and common rooms. The front rooms are older and noisier than the others, but all have hot water and cable TV. Prices are negotiable.
For a location one block from the Plaza de Armas , try Hostal Rojas (Tigre 129, tel. 084/22-8184, US$14 d shared bath, US$24 d with private bath), with clean, carpeted rooms around a sunny courtyard.
The charming Sihuar (Tandapata 351, tel. 084/22-7435, casasihuar [at] hotmail [dot] com, US$25 d) is a two-level building that looks out over a nice patio and garden. The rooms are very pleasant and more tastefully decorated than most, with wood floors and woven rugs and gas-heated hot water. Sihuar is great value.
Also in San Blas  but a little higher up is the Belgian/Peruvian-run Hostal Sweet Daybreak (Pasñapakana 133, tel. 084/22-5776, www.hostalsweetdaybreak.com , US$12 per person, US$24 d private bath, breakfast not included). This cute, family-owned hotel has a variety of rooms ranging from a six-bed dorm with shared bath to double rooms with private baths. Prices are negotiable, especially for groups. It has amazing panoramic views of the city, a lovely garden with rustic wooden tables, free WiFi, cable TV, and hot water 24 hours.
The newly inaugurated Puca Ventana Hostel (San Cristobal 109, tel. 084/24-3673, US$25 d) is a small, eight-room hostel all with private bathrooms, WiFi, cable TV, and breakfast. It has a simple rustic feel, a nice living room with great views of the city, and a very friendly atmosphere.