I stayed 6 nights in Los Amigos Hostel in Madrid and loved every minute of it!
The hostel is safe, really comfortable and clean, maybe because everything is brand new at the moment.
Sheets are provided free and the beds are excellent. The room I was in was on the small side, slept 6 people and was mixed. Showers were clean and hot.
The people working there are really nice and gave me lots of good information about stuff to see in Madrid.
There is no curfew and no lockout time during the day.
Kitchen was available to use but there was no oven, just a stove and microwave. There was a large fridge and freezer.
There is a good common room with tv and comfy chairs and was a good place to meet people. Everyone I met staying there was friendly and we went out in a large group most nights. The nights I didn't go out I wasn't woken up so I guess it wasn't too noisy.
The location is brilliant, right near to the Palace and the metro station Opera with lots of shops and bars nearby.
Remember to reserve (you can do this online)because it gets busy.
Oh yeah, I paid 15 euros a night including sheets and standard breakfast but I think it is normally 17 as it was on promotion when I went.