if you've got the dosh stay at either Hotel 101 or Hotel Holt.
...otherwise the Youth Hostel is one of the best I've ever stayed at: http://farm4.static.flickr.com/3442/3268198868_ffb8a33475.jpg
Stayed at Room with a View. Definitely recommend it. The staff was super helpful, arranged a car rental for us at a reasonable rate. Also upgraded our room at no additional cost! I would stay there again for sure.