I have stayed twice at Hostal Sardinero as it is very good value for your money. The location could not be better, only a 15 minute walk to Museo del Prado and Reina Sofia and Atocha train station.
The Hostal is also surrounded by nice bars and restaurants so you are never too far away from a nice tapa!
The staff is very friendly and the place is very clean and comfortable. The beds were really comfy.
The only problem is that as it is located in an popular area fro going out it can be noisy, specially at weekends. And you should know that Spaniards go out until really late (or early in the morning!)
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