Piccadilly Backpackers is fairly similar to both the other hostels that I've stayed at, here in London: it's big, it's impersonal, and it feels awfully similar to a prison. Three tries, and still no budget accommodation with character in this city: I guess it's just a London thing. Anyway, Piccadilly Backpackers is at least in an excellent location; and putting the rest of the enormous complex aside, the hostel's small lounge and common room is quite charming and very friendly. Good place to stay if you need to crash in London for a few nights.
Rooms: once you get through the prison-esque hallways, they're not too bad — quiet and clean; and each bed is in a sort of "cubby-hole", which almost feels like you've got a private room within a shared dorm.
People: a few backpacking tourists, a few Aussies (and others) looking for permanent accommodation and for work, plus a few older folks. Mixed bag: and overall, the place doesn't really foster inter-guest friendliness.
Staff: quite friendly, but a bit stressed and just there for the hourly pay. Many of the staff seem to be Latin-American and Spanish-speaking — including even a few Bolivians!
Location: one street from Piccadilly Circus — right near the tube, and just down the road from the theatre- and cinema-entertainment mecca of Leicester Square. Also plenty of cheap eats and shopping centres nearby.
Food: the breakfast is fairly cheap, but is utterly unappetising — in true English fashion, they serve your cereal in a styrofoam fish-and-chips box lid (and charge extra for the milk), and the stale burnt toast comes with gluggy yucky jam. Clearly, English food in general is the worst known to man, and English hostel food takes that one (previously believed-to-be impossible) step lower.
Internet: £1.50/hr in the hostel, £1/hr down the road in Leicester Square. Take your pick.
Hot water: didn't try it.