Bargain accomodation in small friendly pension/apartments based around a small bar/internet cafe, with rooms in a courtyard summerhouse and various apartments along the same street. Friendly and very helpful staff willing to do anything for you. Very basic, but adequate and comfortable accommodations nonetheless. I stayed in the "summerhouse" (room 3) and paid approximately £25 per night for the B&B option (it was the same price whether one or two people stayed in the room).
Predominently a gay hotel, I found it very welcoming as a lesbian. Most of the guests were single gay blokes, and the hotel bar provided a great place to meet up with other travellers. You can even have an extra guest for free, including breakfast, IF you let the management know the night before -- not sure if this is a reflection of the local gay bars or what . . . The place also offered a cheap internet connection (1CzK per minute, minimum of 20 mins).
Check out Arco Hotel
Note -- while I was staying there, they were preparing to move the main hotel bar to new premises a couple of doors away. I did not visit the new bar.