Casco Viejo is basic, sure -- but sometimes basic is good. In this case being basic allows it to undercut its competitors on price while still creating a comfortable stay in a city where it can be expensive to stay.
The hostel is pretty central in Panama City's old town. It's a short walk to the water and its beautiful nightime cityscape, several good restaurants, and the local party hostel, which non-guests can drink at, but for a premium price. A taxi to the bus station will cost you, but the airport is a little further outside the city. As with anywhere in Panama City, don't walk around alone at night as plenty of muggings have occurred in this area.
Rooms and Bathrooms
All rooms are large and spacious, with the large dorms having a choice of bunks and singles. The beds are steel-tube-framed, with ladders on every bunk -- something that is surprisingly rare in hostels -- and all sheets and pillows provided. There are also free towels if you ask for them and steel lockers for every bed. Many rooms on the first floor have large balconies, which are great for relaxing or having a sociable drink in the evening. It is by no means a party hostel, but being at the bottom end of the price range, it tends to attract a sociable crowd.
There are three bathrooms, all separate, which means privacy but often means you can be waiting for one to become free. There is plenty of room to hang stuff and change (if they are all free, the downstairs shower is the best).
There are not a great deal of common areas in Casco Viejo but there is a decent sized kitchen for cooking meals and a courtyard where the free breakfast of bread, jam, peanut butter, and bananas is laid out. On top of this there is a small seating area in reception where the one computer is kept. There is free Wi-Fi throughout the hostel.
If you're looking for a cheap place to stay in Panama City, Casco Viejo comes highly recommended. It is basic but it is clean, comfortable, and close to the action and party hostels. The staff are friendly and will help you out with whatever advice you need for your stay in Panama.