After trying out two other hostels in Ushuaia, we finally found Hostel Aonikenk. It's cheap and has awesome views, free internet, and breakfast as well as clean comfy beds. What more could you want?
Hostel Aonikenk is thirty meters from the corner of Magallanes and av. 25 de Mayo. It's a bit of a climb from the centre of town, but Ushuaia is at the foot of the Andes, so it's sort of expected. If you arrive in Ushuaia
by bus, the driver might be able to drop you off close by! The hostel is really a large house, surrounded by a gated garden. Its main selling point is the huge bay window, giving awesome views of Ushuaia and its bay. It's worth the climb!
Rooms and Bathrooms
The hostel has several small dorms (usually three or four beds each) and a large bathroom (shower over bath, toilet in the same room). The beds are normal single person beds, although they can be stacked into bunk beds if needed. There are lockers in the room (bring your padlock) and the heater is really good for drying your socks (unlike gas heater where they will just catch fire!).
The wonderful surprise about this hostel (in addition to the view!) is that towels are provided as well as shampoo and soap, just like in hotels! It's very nice. The bathroom is large and roomy, but there is only one and it also contains the toilet, so start queueing! The shower works well and you can place your soap and shampoo on the edge of the bath, since there is no soap holder. Although there aren't any hooks either, the bidet will do a fine temporary shelf (provided no one has used it before). The whole hostel is cleaned daily.
When first coming through the door, with the little reception desk and the free internet computers to your right, you walk into the common living room with sofas, a TV hung up near the ceiling, and stairs to the first floor dormitories. At the end of the room, you will discover the magnificent view of Ushuaia through the windows that make up the whole southern wall. A kitchen bar runs all along that window-wall so you can eat your (free) breakfast admiring the city below you. There is also another table for those who'd rather watch TV.
There is a fully equipped kitchen (although it lacks a few utensils and could do with a few extra pans for when all the guests want to cook at the same time). The fridge is at your disposal and there is even a free food drawer. Breakfast consists of bread; half a dozen jams; and the inevitable dulce de leche, butter, tea, coffee, and hot chocolate. Coffee, tea, and hot chocolate are free all day but no milk is provided for the hot chocolate, so you need to buy your own.
During our stay, there were quite a few Argentines staying there for lengthy periods of time (three to four weeks at once) so this might be a good place to meet nationals. Hostel Aonikenk is also often absent from guidebooks, so it's not crowded by foreigners, and the few who end up here have heard of it by word of mouth. And it's less expensive than other hostels in the area.
Frankly, this is one of the best places in Ushuaia -- still fairly cheap, with all the comfort you need and views like nowhere else.