I stayed at Los Amigos last week and would definitely recommend it if you're backpacking around and just want a cheap friendly place to stay. It was full up when I was staying there so booking in advance seems to be essential. There are about 7 dorm rooms each with 6 bunkbeds, and there is a kitchen, and a nice common room where everyone congregates, as well as an office with an internet connection that you can use very cheaply. The staff are friendly and helpful, really helpful to me when I had my purse stolen by some hijo de puta in El Rastro (I know, how very unoriginal). It's very central at Opera Metro so takes a few minutes to walk to Sol or the Plaza Mayor. They're expanding the hostel at the moment, it looks like it will be doubled in size, but I would imagine the works won't be finished for a couple of months.
Most of the backpackers staying there seemed to be Canadian! There were a few Americans, Aussies, Brits and Dutch, but like the rest of Spain it was about 75% Canadian last week! There was a big crowd of people going out every night I was there, so even if you're on your own, as I was, you quickly meet up with people and have the opportunity to go out, if you want to. It cost 15 Euros a night plus you had to give a 5 euro deposit for something, not sure what!