Depends on what ur looking for in a hostel. if you like it rustic, go to carlitos (this is also one of the cheaper places) or Dereks.
Dereks is very nice and beautiful, about a 20 min. walk through the jungle to the town, dive shops and restaurants.
I would opt for one of those.. it gives the real island-feeling.. they're not 'just another hostel' and thats really nice.
some tips:
If you walk along the beach from dereks to carlitos, watch out for the dogs at one point.. they scared the hell out of us..
If you wanna go diving.. Dive little corn is really good, not too crowded (i did my padi-course one on one) and the diving instructors are the nicest people i've met.
Looking for a good meal? The cuban place is delicious, and in comparison reasonably priced (10 dollars for lobster)
and as you heard before, if you see the kids selling coco-bread: buy it!! makes a really good breakfast or lunch!
have fun there!