Just outside the old town – the views are good but you'll have to carry your luggage up some stairs – this popular but peaceful hostel has dark, compact dorms (but the beds have proper mattresses). Private rooms are big, with shared balconies, and there's a roof terrace. There's a small communal area and the helpful staff can arrange tours.
It's up an alley just off Jinhong Lu, which the locals know as Beimen Jie. Call ahead and staff will come and get you.