a friend and i spent 4 nights in queenstown, the longest of any city on a 3 week tour, and loved the butterfli lodge. the ONLY minor negative is that it is about an 8 minute walk into town down a big hill and back up it (which was a little tiring late at night!). so if you want a central central spot, this might not be it.
because it was a little set back, though, and up on the hill, it was extremely quiet and peaceful and provided absolutely breathtaking views of the area. we had the downstairs 2 twin room, which had a little patio and opened to the driveway, which was nice for unpacking and exiting without going back through the house.
the kitchen is a decent size and clean and the living area is welcoming and cozy, complete with a fire place. while the laundry is outdoors, it's right near the kitchen and by that point in the trip, we were happy to have the ability to do it!
the bathrooms, though shared, were always clean. i felt that people were respectful of others and didn't leave a mess. (that probably says something about the type of people the hostel attracts!)
if you do stay there, there's a five-star hotel (can't think of the name right now) right next to it... very chateau-looking... anyway, the bar features floor-to-ceiling glass windows overlooking the lake/mountains... great spot for a sunset drink on the way into town!