Environment: It's about a ten-minute walk from Gran Via. It's located in a so-so area, with a decent amount of shops to buy basic stuff. They were doing construction while I was here, but this was back in July 03', so I don't think you will need to worry about that now.
Facilities: There is no laundry service. I don't remember there being a kitchen. The staff is a husband and wife and their daughter. They are very friendly and I felt very much at home here. If you speak Spanish, they will love you. The rooms are huge and they even have a mini fridge to hold your stuff. The windows are big so you will not be too hot inside.
Atmosphere: There isn't a party atmosphere here, but it's not discouraged. I think it's like this because they don't receive many guests, which adds to the intimacy of the place. They allow alcohol inside, and the couple will even drink with you.
Overall: It's an average hostel. If you find better, go there. But this is not so bad if you decide to stay here.