HI is a great place to stay if you are on a tight budget. Some are as good as the 2 and 3 star hotels. I stayed in one in Santa Monica and I prefer the Hostel International over the Holiday Inn.

In SF, the HI are located in the Wharf region and Union Sq, so while some are not so great locations, others are in the thick of things.

Without fail, I have always met people I ended up travelling/sightseeing with and this makes the experience great. Having said that, I have never had a private room, though in some they are available (at a premium). Also, as WillTravel said, they do not provide towels, but do usually provide bed sheets and pillowcases.

I am not sure I would ever compare HI prices with 5 star hotels! In addition, I would advide some caution. In my younger years, I did a trek of California, and while I was taking a shower, I had my credit card pinched from my room,. Travails of shared rooms. In about a dozen different hostels that I have stayed in (all HI), this was the only unpleasant incident against many happy times. Also this incident had a happy ending as this was my second last day and after I explained what happened to the AC agent, he let me go back to Canada a day ealry, without making me pay for a change fee (I had very little cash left and that was my only cc).