I've been "doing the hostel thing" for almost 10 months now: and for the most part, I've really enjoyed it. Most of my hostelling experience has been in the areas I've travelled the longest this year: that is, Mexico and South America. Down there, hostels are super-cheap, super-friendly, and super-casual. Wherever you go in Latin America, you'll always find somewhere that has a free bed (and it's usually somewhere good): this means that you can rock up in a new town, wander into one of the local hostels, and stay there until you decide to move on. You have total flexibility as to where you want to go, and how long you want to stay there. That's backpacking, the way it should be. I can count on one hand the number of times I had to book a hostel in Latin America, or the number of times I was turned away due to lack of space there. But here in Europe, it's a different story: around here, true blue backpacking simply ain't possible anymore.
The trouble with European hostels is that you have to book them! People don't just rock up to hostels in Europe: they book them days, sometimes even weeks in advance. If you don't have a booking — especially in the better and more friendly hostels — then don't expect to find a bed. This is especially true on weekends, and on any kind of holiday or special event. I'm deadly serious when I say that in every major / popular city in Europe, every weekend, virtually all of the decent hostels become 100% booked out. This is ridiculous! And the problem is caused by the fact that so many hostel-goers here in Europe aren't backpackers: they're people who live and work (Mon-Fri) around here, and who simply go away and stay in a hostel for a weekend getaway. Obviously, nobody goes to South America for the weekend — everybody's who's there is staying at least a month (and the locals don't go to "gringo hostels") — so this bizarre "weekend rush" phenomenon doesn't exist.
Hostels in Europe fill up fast. If you book them too late, then you're forced to stay somewhere empty and boring, where you won't meet anybody. This is what I'm going to be doing in Dresden next Saturday night: although I searched for free beds a week in advance, all the good hostels there are already completely full — the only place left is some dump way out from the city centre. Or, even worse, you could be forced to accept whatever scraps of space a hostel can afford you, such as I had to do several weeks ago in Rome, when I slept in the attic.
Possibly the worst thing about hostels in Europe, is the method of booking that many of them force you to use. In South America, on the rare occasion that it's advisable to book ahead, booking can usually be done easily enough by sending an e-mail to the hostel and requesting a bed, or by ringing them up and requesting in person. Here in Europe, the preferred method of booking is via an online booking engine — of which HostelWorld is the biggest (it has a virtualy monopoly) — where you're required to make a secure online deposit payment using a credit card. Many hostels do not accept bookings directly — they don't even advertise their fricking phone number — and they literally force you to go through services such as HostelWorld instead. This is a serious inconvenience: it means that not having a credit card is a barrier to entry; it raises a big security risk for people who have to book "on the road" at Internet cafés, where it's highly unadvisable to type in a credit card number on their (often virus-infested and crap-ridden) public PCs; and it locks you in to a booking, because if you cancel then you lose your deposit, and if you simply don't turn up then they're entitled to charge you for one night on the card.
Backpacking is about being able to say: "tomorrow I think I'll go to this city, 'coz last night I met some dude and he told me he had fun there", or "this place is good, I think I'll stay here another few days". Backpacking is not meant to be a gawddaym Kontiki tour, where you look at your calendar and say: "today's Tuesday, so this must be Belgium". But when you're forced to make pre-paid bookings more than 2 weeks in advance, and when an itinerary begins to impose itself upon you, then the former simply isn't possible. This ain't backpacking, this is bollocks!
Perhaps worst of all, not all hostels in Europe are backpacker places. Before you pick your next hostel, you need to be very careful that it's actually frequented by your own globe-trotting kin, rather than by families, by older folks, or even by annoying school groups. The European HI hostels, in particular, have become notorious for getting block-booked by school kids, and are now generally avoided by real backpackers. Essentially, such hostels have deteriorated into little more than "cheap hotels", and offer none of the social advantages that a backpacker such as myself expects. In retrospect, I'm quite glad that I lost my HI membership card when my bag got stolen (several weeks ago), as it gives me even less incentive to stay in these unappealing places. Independent hostels are better, but still need to be investigated before being chosen as a place to stay.
What I'm discovering is that — unlike Latin America — Europe today is lacking in "proper backpacker" hostels, for the simple reason that Europe today is also lacking in "proper backpackers". Even in the best hostels, the majority of the guests are on a short trip: seldom more than 1 month, and often as little as 1 week or less. Many of them are not far away from home and way out of their locale: on the contrary, quite often they're Europeans themselves, or sometimes not even from a different country. A lot of them have travel as a secondary concern, and are just on a short break in-between work or study commitments nearby. And considering what a ridiculously small, wealthy and well-serviced place Europe is, this does make perfect sense. Europe's not an adventure, and most of its travellers are not adventurers.