We recently had a guest stay at the Dragon Hostel, a place we have been regularly recommending to budget-minded friends and visitors to Hong Kong since we stayed there back in 2005. At that time we found Dragon Hostel to be a standard hostel/guesthouse that met all of our basic requirements for cleanliness, noise levels, safety, security, location and price. This is something difficult to find in Hong Kong, especially now with the present hotel room shortages we regularly have.
Since the time of our stay in 2005, we have have guests stay at Dragon on a number of occasions and little has changed, including our last guest in December 2011. Dragon Hostel has remained a consistently very good option and one that we remain comfortable recommending for those wanting to visit Hong Kong.
To avoid repeating many specifics, we suggest reading the review written by fellow Hong Kong Destination Expert, asiatravel24 from 10 January 2012, titled 'An Oasis in Mong Kok'. He sums up the Dragon Hostel experience quite well and in the same manner that most of our guests have felt about staying here over the past seven years.
Hint: Dragon Hostel is quite popular these days and is fully booked much of the time. In the past, our guests have been able to book them within a week or so before coming to HK. Now, that is very often not possible because of their popularity. Thus, we suggest emailing/calling them to reserve a bed well in advance of your intended visit to Hong Kong.