Istanbul Chillout Hostel & Cafe

Chillout Cafe is both a hostel and a Cafe and has recently opened two more buildings. All three of them are around Istiklal Caddesi in Taksim. I've never slept in the Hostel but I've spent a fair amount of time in Chillout Cafe and met quite a few very very interesting and friendly people who I've had hourlong conversations with and am still in touch with.
There aren't a lot of things you can eat and they're not very big meals but you can have cheap but good coffee and other drinks and you can order yourself a cheesetoast or a durum (you have to have sucuklu tost)

The atmosphere is amazing. It's a small cafe but it's very colourful with very relaxing music and there is a friendly bond between everyone.

you can look at the prices and the locations of the cafe and the hostels here: http://www.chillouthc.com/main.htm

If you like alternative, cheap places full of interesting people and a family-like atmosphere then this is the perfect place for you.