Try the Czech Inn – you can thank me later. 
 
If that’s full, try Sir Toby’s.  By far the best #2 hostels.
 
Both are easily accessible by tram and are walking distance to the centre.

Prague is pretty small and compact, you can get just about everywhere on foot if you are determined, walking between districts isn’t bad at all. 

heavydrinker,
 
I actually came to this board for advice on the trip that me and two buddies are taking to Prague this weekend.  I followed your advice and booked the Czech Inn (how could I not take advice from a guy named heaydrinker). 
 
So, since I was swayed by your hostel recommendation, what bars can you recommend for 3 guys coming to Prague for the first time who want to sit back with a cold Czech beer and admire the beatiful ladies of Prague, two things which this city has such a wonderful reputation of being able to provide?

 
For bars go to the Zizkov (sp?) region, not a far walk & lots of banging clubs.  Also, there’s a nice bar downstairs at the czech inn that’s usually jumping by night’s end. There’s a nearby bar/restaurant that has wicked breakfast too, Bandito’s.
 
The hostel will provide a map with details on nearby bars & stuff, I found the recommendations to be spot on.
 
Enjoy Prague bro

thanks guys, i will cheack it out.