My cousin and I went to HK last March 7-10, 2012 and stayed at Dragon Hostel. If you're looking for a fancy accommodation, this ain't the place for you. The rooms are small but cozy, really (really) small bathrooms that has reliable hot and cold water, and the aircon units work well. I have to give them credits as well for the fast internet connection even inside our room.
The location is great. We just walk going to their MTR that takes us anywhere in the city. There's a food stall near it that's called MANKEE that has great authentic HK street food. It's open even during the day. Dragon Hostel is near all establishment that a tourist is looking for.
You might want to pick up some basic Cantonese words before going here, the staff doesn't speak English. Also, bring your own plug converter for your chargers, laptops, etc.