Colonial House Inn (Puente Grau 114, tel. 054/22-3533, www.colonialhouseinn-arequipa.com [1], US$11 s, US$18 d with breakfast) has rooms with shared bathroom around a courtyard and a nice rooftop terrace with mountain views. This bed-and-breakfast is located on a busy street, but the thick colonial walls keep out the noise. Book early since the place is often full.
El Caminante Class (Santa Catalina 207-A, 2nd Fl., tel. 054/20-3444, www.elcaminanteclass.com [2], US$13 s, US$18) is a very good deal, conveniently located in an old 18th-century house between Plaza de Armas [3] and Santa Catalina Monastery [4]. Rooms are comfy, with private bathrooms. Amenities include a laundry and a book swap. There are also cheaper rooms with shared bathrooms.
Posada de Sancho (Santa Catalina 213-A, tel. 054/28-7797, inkarootshostel [at] hotmail [dot] com, US$13 s, US$20 d with breakfast) is a simple colonial home with 15 large rooms and two tiled patios with sitting tables and potted geraniums. Rooms have wooden floors, high ceilings, and windows facing either the street or the patio. There is no Internet.
Los Andes Bed & Breakfast (La Merced 123, tel. 054/33-0015, www.losandesarequipa.com [5], US$13 s, US$24 d with breakfast) is quite a new and excellent option, with comfy, very clean single, double, or larger rooms for groups, with and without private bathrooms. Features include an open kitchen where you can cook meals, safe security boxes, luggage storage, laundry service, an impressive library and reading lounge, book exchange, cable TV, and WiFi.
La Casa de Sillar (Rivero 504, tel. 054/28-4249, US$16 s, US$25 d with breakfast) has nine rooms, some with private bathrooms, in a colonial house opening onto a sunny patio. Four rooms traditional sillar arches and construction. The rooms are simple, and the breakfast more than ample: yogurt, fruit, and hash browns. There is WiFi, along with a TV room and laundry service.
Links:
[1] http://www.colonialhouseinn-arequipa.com
[2] http://www.elcaminanteclass.com
[3] http://www.moon.com/destinations/peru/lake-titicaca-and-canyon-country/arequipa/sights/plaza-de-armas
[4] http://www.moon.com/destinations/peru/lake-titicaca-and-canyon-country/arequipa/sights/monasterio-de-santa-catalina
[5] http://www.losandesarequipa.com