We were pleased to see that this hostel has been rated in the top 10 in the world the past couple of years, and it was clear to see why. The only downside is the free breakfast is just toast and juice, but its still a FREE breakfast. Galway was great and the hostel was great too. Friendly and helpful staff, nice rooms, and free towels too. I would unquestionably stay again.
The Wombat hostel was a solid pick. It is near the train station, but you will probably want to buy a public transit pass for getting to the major sites of Vienna if you aren't willing to walk several miles in the day. The bar in the hostel makes for a nice, social atmosphere. Breakfast is not free, but it was a good value for 3.70 or so euro. The room had lockers in it, which was great for security. The staff were friendly and helpful and my experience there for a few days was great.
One nice part about Funny Farm is that it is located right next to the canyoning shack. The directions are hard to follow and one staff member didn't seem to enjoy helping people, but the hostel is fine for staying in Interlaken. I think I found it to be the least expensive of all the other hostels. It is a hotel and a hostel. The rooms are fairly standard.
The hotel/hostel has a great location less than five minutes from the train station and very close to the cathedral. The two staff men I interacted with were very friendly and accommodating, but apparently the third did something weird with booking our room that led to two girls having to change rooms. The hostel was inexpensive and was a vood value for a night stay.