Hey I'm in Tofo now and I've been here for 2 months.
For your money the standard is not good if you're on a tight budget, but Tofo is an amzaing place and this should not put you off- how much time are you going to spend in you room anyway?
Bring a thin sleeping bag if you can as it gets quite cold at, and yes you will need a towel as one is not usually provided. As Kaz said be extra careful with your money, phone ipod etc. Although things very very rarely get stolen it's best being safe. Some of the nicer places have a safe which is safe but some of the others don't. It's best keeping it on you, or do what I do and find a nice place to hide it - namely a hole in the sand!
Anyone who has decided to stay at Fatimas in Tofo please be extra safe, stuff goes missing from here on a daily basis, even from their safe. The dorms are particularly unsafe and NOTHING of any value (even a nice t-shirt) should be left in Fatima's dorms, or even around the restaurant when you're eating.