I would highly recommend the Beijing Hutong Inn (although it feels more like a hotel). The location is excellent (inside all the horrible ring roads). The staff are exceptionally friendly and helpful. Unlike a lot of others cities I've stayed in, this feels like a very real location to stay. You stay next to the average Beijing people with food stalls, and walk in shops (people's houses). I can't think of one negative point about this hostel, and to be honest I usually like to whinge about something. So stay here and you won't regret it. Enjoy!