Stayed three nights here in August, superb location 10 yards away from the Cathedral and 2 mins walk from the Plaza Mayor, fantastic rustic hostel full of character charm ( and some low doorways...ouch!) 30 euro for a double with shared wc or 65 euro for ensuite. Only intended this to be a one night stop but was so taken aback with the place we stayed longer, oh and when the bars on the Plaza Mayor close at twelve on a Saturday night, cross the street, go down the steps and take in any of the six bars down there, each affording fantastic views over the gorge. well worth the rollercoaster train ride from Madrid (2.5 hours 9 euro each).

Tip: Get the bus up from the bus/rail station,the No2 goes all the way to the top

That really is good news about the good value accommodation. Cuenca really is a magical place. It even has (or used to have) a famous beggar who would give a mini-guided tour in exchange for your 100 ptas. Wonder if he is still there?