I´m staying at Hostal Gonzalo. Rick Steves recommended it in his Spain 2005 book. ¨Hostals¨ are not what we Americans think hostals are...they´re little family run places, like a B&B. Mine doesn´t have breakfast. Very plain, hard bed, no hotel services (restaurant, bar, ice machine, etc), but for $45euros per night it´s fine. Cute, little neighborhood, near the two major museums. 1 block from the Thyssen museum. Nice owner, he speaks English. Starbucks around the corner. Walkable distance to everything. So, I would recommend it if you don´t plan on spending any time, other than bathing and sleeping, in your room, and are used to roughing it. While I do not regret staying here, I would not stay in a little place like this again but only because I´m prissy and like big soft beds.

Hope this helps!