Rovaniemi, situated in Finland, is the capital of Lapland (which is the northern part of Finland), and has a population of approximately 60,000 people. Having a really long history (first proven settlements in the stone age), Rovaniemi is a very important center of commerce in the otherwise very scarcely populated areas of Lapland.
Hostels in Rovaniemi, as in most parts of Finland, can be considered pretty expensive but of high quality. The city has it's own airport and is also served by a bus and train network, see the individual sites for details. That said, the city center is very concentrated and easily walkable, so your feet are your best transport between your Rovaniemi hostel and sites in the city.
Rovaniemi is home to the famous Santa Claus Village. It is situated about 8 km north of Rovaniemi and is served by a bus line. Although touristy, this is your chance to meet Santa Claus. There is also Santapark which is an amusement park with a Christmas theme. It is a bit on the expensive side but well worth it for the thrill-hungry. There is also a museum and a nice church to see in the city.
Rovaniemi is also a starting point for many winter activities, like snowmobile safari's and dog sledding excursions. There are plenty of operators available. This is one of the best ways to see the beautiful nature of Lapland and very highly recommended. There is also a winter sports resort near Rovaniemi (called Ounasvaara) for those interested. The winter season is from November to April, which is a very crowded time and booking ahead is recommended for ski resorts. You should be able to get more details by talking to someone at your Rovaniemi hostel reception desk.