If you want a good and cheap hostel in Lisbon try the Johnies Place (http://johniesplace.com/). They have a fantastic double room ensuite. It's located in the beautiful Miradouro da Graça, historic city center. It's a good location, close to good grocery stores, a tram, metro and bus stop, and within the downtown area so you can walk everywhere
It is a very clean hostel, in a beautiful 16th century palace, with some difrente type rooms, private suite, 4 persons, 6 persons with or without wc, big living room, big kitchen, and excellent common areas. The owner is very friendly and can give you always the best directions and special tips about the city.
They have breakfast, all day coffee and tea, wireless internet connection and computers. Sometimes they include a special cake in their free breakfast :)
Probably the best hostel in Lisbon ;) about 5 years ago