Ostello del Borgo is in the centre of town. It's one of the few central Sicilian hostels, and therefore a stopping point if you plan on seeing any of the centre of the island. It comes highly recommended. For an island that has few services for budget travellers, the owners have done well. It's well signposted from the bus station, simply walk towards the centre of town and you will come across the signs. It's about a 10-15 minute walk from the bus stop.
It's actually an old convent that has been restored into clean spacious rooms. They divide men and women and there are usually two bunk beds per room, and sometimes an additional single bed. Men and women share the bathroom at the end of the long corridor. They also have a chapel, a breakfast room, and a tv lounge (off the reception). There is also internet use at 2 Euro per hour in a separate room. Private rooms are available at a higher cost, but dorms are inexpensive and include breakfast. In the summer it can be quite full, but come winter you can have a room to yourself (check they are open as they may close for a month or two).
The bathrooms were clean, although the showers tend to flood a bit. The breakfast is a self service type with coffee, tea, croissants, cereals, bread, packet toast, jams, juice, and water. The staff are also delightful. Without exception all are helpful and do not demonstrate the slightest problem to help you with even the most miniscule thing.