Lorraine's Guesthouse is located in the south of Caye Caulker, in the less touristy area. Nevertheless restaurants and supermarkets are close and since the island isn't too big anyway, any point on the island is a maximum 20 minute walk away.
The staff is nice but a little strange from time to time. The boss is open-hearted and helpful. If you want to play pool in the evening, he and his grandson are the perfect opponents - at least if you know how to play- they are good. The boss loves drinking rum, so don't be surprised to find him half drunk sitting under the porch at night. Speaking of the boss's grandson: He's going to take over the business once his grandpa is too old, but he doesn't seem to like the idea that much. Nonetheless, he's a nice kid and helpful, too.
The huts are clean and comfortable, but you will realize that the mosquito nets only provide a minimum of protection against the sandflys. There are sandflys everywhere. But that's a general problem in Belize and the Cayes. Take strong mosquito repellent with you to get rid of those blood suckers.
Be careful who takes you to the hostel. Try to get there on your own, not with one of the hustlers waiting at the port - they will charge a provision, which will be passed down to you via the room prices.
The prices at Lorraine's are low, but you should try to bargain, since the prices depend on the accommodation-situation on the island and thus vary a lot.
All in all it's a cheap and recommendable place to stay, but don't expect too much comfort.
One last thing is left to say about the Cayes and Belize: I had a feeling of being ripped of everywhere I went where there were no fixed prices. Belize is more expensive than the countries around it, which may enhance this feeling, but If you don't feel comfortable bargaining, you shouldn't try to travel on a tight budget in Belize. It won't last.