I wanted to leave a current recommendation for a hostel.
In July, my friends and I stayed at the Green Lizard and loved it.
The owners (lovely!) met us at the bus station late at night and walked us back to the hostel--such a courtesy after a long day! The places is v. clean, easy to walk to the sunbathing and swimming areas, and easy to get to late at night. There is a small do-it-yourself kitchen and two different patios to enjoy. They also provide a laundry service.
Love the Green Lizard!!!