The Czech Inn is Prague's newest hostel and it is fantastic. Great location (walk or tram to centre) with some very cheap eateries nearby. The staff are superb; welcoming , friendly and very accommodating.
If you think a hostel means grubby beds, grubbier people and grubby amenities then think again. Showerheads the size of dinner plates, crisp white bedlinen, polished wooden floors, an 'all you can eat' buffet breakfast, decent coffee, brilliant bar area, free internet and expert advice all contribute to what makes this place rock. They will also arrange transfers and walks for you.
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