The Magic Bean

The Magic Bean is one of the nicest hostels in the Mariscal area of Quito.  It is right in the center of the action, with most of the major clubs, bars, and restaurants surrounding it for blocks in every direction.

Though slightly more expensive (though $8 for a shared 4-person bunk room with breakfast isn't bad for Quito) than other nearby options, it is much smaller and feels more secure than many other hostels.  You get your own large locker (including a lock) in the bunk room, plus the rooms have locks themselves.  I left various important and costly items there without any trouble, though they do provide a safe if you feel the need for more security.

The food is good, especially the coffee and fruit juices.  The Jugo de Mora is easily the best part of the included breakfast.  When I was living in Quito I went there just for the food, which while expensive and nothing spectacular is the closest you can get to a big american style breakfast in the area.  Plate-sized pancakes, home fries, etc.

Reservations are recommended, as this is a well known hostel and it has a limited number of beds.  Reception is opening 24 hours.