Loki hostel, La Paz
Much like its counterpart in Cusco, Loki is the place to stay in La Paz. Slightly overpriced, brimming with luxurious extras — e.g. bar, TV room, free Internet — and strictly gringos only. Definitely the place to go if you want to meet people, and if you want to party all night, every night. Loki La Paz is quite new (the Cusco one is the original and the biggest); but despite not yet being in any of the guidebooks, it's already fully booked out days in advance. It is in itself an attraction of the city.
Rooms: crowded, and difficult to sleep in before 2am, but comfortable.
People: numerous, very friendly, all English-speaking, and seldom sober.
Staff: much like the people (in fact, many of the staff are just guests who have never left).
Location: A bit away from "gringo alley", but close to the main drag of La Paz.
Food / Internet: free breakfast of bread and tea, plus free Internet (2 PCs).
Hot water: hot as can be, 24/7. Added bonus: proper water heaters, so no electric shocks!