Don't think you have to stay right in the Old Town to be close to everything in Prague. Though located in the New Town, the Vesta Hostel is a five-minute walk from Wenceslas Square and right next to a stop on the metro line "C," and practically in the main train station. Though that location means the area looks a bit dodgy, it's actually pretty safe despite first appearances (there's a police station on the third floor, so backpackers fleeing the law might want to find another safe house). Just step over the junkies and hobos in the underpass and don't wander into the park at night and you should be OK. Clean private bathrooms with hot water are most definitely a plus, though the staff have been known to be indifferent and the hostel is quite basic but also the cheapest you can get.
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