Try Chueca Pension ( www.chuecapension.com
). It's right in Chueca and is good value. It got good reviews here on this board (try a search) Outside Chueca, but only a 5-10 minute walk, is everyone's favourite and very gay-friendly Hostal Adriano ( http://www.adrianohostal.com/
) You might also want to check out the gay Hostal Puerta del Sol, ( http://www.hostalpuertadelsol.com/
) which as the name indicates, is smack in the centre of town, and around 10 minutes to Chueca. The prices in all of these are around the same - though you can pay more (100 for a double) and get a room with a balcony on Puerta del Sol.