The Hotel Le Rhino is (as with most of the places I stayed) a budget option. It has basic, but clean double rooms with a shower for KSh1000 (£10/$15) per night, and they don't seem too bothered about you wanting to sleep more than two people in them if you want to save money. There are also single rooms available.
The hotel has a fairly lively bar and a decent, very reasonably priced restaurant, both of which are popular with the locals. And of course there's the added bonus of a video shop and butchers on the ground floor! There's something about that Kenyan tendency of having joint hotels and 'butcheries' that's not quite right.
The only irritating thing is that early morning prayer calls from the mosque across the street and beeping of matatu horns below can be an annoyance. Try and get a room that's not at the front of the building to avoid this being a problem.