I stayed 5 nights at Hostel Rosemary when I was in Prague this January. The hostel was very quiet and the rooms were fantastic. Large kitchen/eating area in the room, private bathroom and the beds were clean and comfortable. The rathe I believe was about $25/night/person. It's very well located - a 5 minute walk to Old Town and Wenceslas (sp?) Sqaure and just around the corner from the main train station.
You can check out ratings and reviews of Hostel Rosemary and other Prague hostels at
www.myhostelworld.com