This is a very centrally located hostel, and it's two floors. Even though it's a small hostel, it gives off a big feeling. It's clean, has free internet and breakfast, nice and friendly staff, it's closer to the Opera and the main streets in the center of the capital, next to several metro stops and about five minutes' walk from the Danube. The building looks a little decrepit, but it's ok, the hostel is clean and it's in front of the conservatory, so you'll hear music most mornings.
Highly recommendable, the price per bed in each room is between 15 and 18 euros.
I've been to Budapest twice, and stayed at this hotel both times. The first time I chose it just because it was near the train station, but I liked it so much that I went back again. A clean facility with comfortable rooms, in the centre with the underground station at your doorstep.