Far better than you might expect from a hostel. Rooms are comfortable, but the front ones look out over the Plaza and can be noisy. (There were road works when we stayed and this caused traffic jams with cars honking, particularly late at night.) For this reason, it might be better to ask for a room at the back. A very good breakfast was included with our rate. The hostel was ideally situated 5 minutes from Plaza del Sol, a couple of doors up from a jazz bar, and within 50 yards of Plaza Santa Anna, home to several lively bars and restaurants.
Web site at: http://www.hostalpersal.com/