Wombat's hostel, Munich
Wombat's Munich is a great place to stay if you want to experience the best of Munich. The free daily tour of Munich, that they run for their guests, is an excellent introduction to this gorgeous and unique city. Plus, the bar and lounge area (with pool table, and a funky "winter garden") is (a) packed with the hostel's lively and "true-blue backpacker" guests every night of the week; and (b) a good place to begin sampling the best thing about Munich: beer! However, Wombat's is also a little too much the "stereotypical backpacker" joint: while here, you really are expected to party hard and to drink harder. And — as its name suggests — if you're not sick of Aussies already, then you will be once you're done staying at Wombat's.
Rooms: clean, secure (individual lockers, and funky electronic keys), quiet and spacious. I'm really liking the standard of rooms in these German hostels — they know how to do it around here!
People: in a nutshell: Aussie. Seriously, at least 60% of the guests are Aussie, and most of the rest are from other native English-speaking countries. Need I mention, then, that they're rather the beer-drinking and pub-attending crowd? :P
Staff: curt and professional, and available 24/7.
Location: virtually across the road from the main train station, and a quick walk from all the main sights of Munich (the city centre is nice and compact).
Food: buffet breakfast is ostensibly €4, but (like at CityStay in Berlin) I snuck in for free every morning that I was here.
Internet: numerous PCs available for €2/hr — go round the corner, and you'll find places offering the same thing for half the price. Are European backpackers really that stupid — how do hostels around here get away with so blatantly ripping people off on the extras?
Hot water: very good; plus, every dorm has its own ensuite bathroom! Talk about luxury :P.