1

I know that you write that you want to walk but my recommendation is just a 10 minute train trip from central, very very easy to get to. It is clean, the room is large (by Scandinavian standards) and breakfast whilst it cost extra was great I will definitely stay here again when I visit Stockholm in early May.

http://www.fridhemsplan.se/en/

In fact all of the STF hostels I have stayed in over Sweden have been great. If you are planning on doing a lot of sightseeing i.e. more than 2 museums a day in your stay then you may want to consider the Stockholm card. It includes free public transport and museum entrance and is limited by time. We got great value out of ours but you need to go to about 2 museums a day to get the value.

Stockholm is small (touristy bits are fairly close together) but having said that walking takes a lot of time, from central station to skansen took us an hour one way. Tram was only 10 minutes and included in the card. If you don't want the Stockholm card there are tourist day passes for the public transport too.

Happy travels :-)

2

Check out CityBackpackers. It gets very good reviews.

Note: I live in the city and have not stayed there.

3

Have a look at the Red Boat, if you want something a bit different, I loved staying here http://www.theredboat.com/ You can get a private room for about £50 and you will have nice views over the water.

4

I'd second the Red Boat, it was great. My friend and I were there in August and even though we'd booked to stay in a 4-bed dorm, we ended up having it to ourself. It's really close to everything and gives great views of the city over the water.