Dorms are up eight beds in a large room (no bunks) with a kitchen, although there are no locks on the doors, so you will have to trust other travellers.
The atmosphere is great -- by the end of the week, I was acquainted with almost everyone else staying at Vara's and we all happily drove our mopeds down the road together to island dancing nights and to the Cook Island National Fire Dancing Competition (July), as well as to the 'pub crawl' organised by Vara's.
A very reasonable NZ$18 per night for a dorm bed.

The accomodation itself is basic but fairly decent. Generally 6 single beds in a room, shower block across the way depending which room you're in.

Warning: the showers are solar heated, the best time is about 3.30 - 5 pm.

There are single rooms and units for rent as well. The kitchen in one of blocks is pretty crap - ancient and dodgy cooker with few untensils but the accomodation block next to the beach has a much better kitchen if you can be bothered to cook.

There's a large common room where most people gather in the evening and the local shops sell booze. Free local telephone calls, use of barbecue, laundry ($4.50 and up). At Vara's office you can rent bikes and snorkels. There are also a couple of bar/restaurants in walking distance and, more importantly, a fish and chip shop five minutes away. The bus stop is right outside Varas.

Vara will send someone to pick you up from the airport and you can also book a shuttle for the return trip. Key deposit $20.

One other thing about Varas, it's one of the friendliest hostels I've been to, I had a great time here.