Melting Pot Hostel – No beach visible from the common areas or outside area, is across the street from the beach unlike the photo leads you to believe (of a couple chairs in the sand). Staff are not very friendly. No 24 hour area to use computer, read, or chill. The outside area and lobby both close promptly at midnight. Very slow wifi. Very strict staff. My recommendation is to stay away.
Oasis Backpackers Hostel – Great hostel right downtown malaga. Highly recommend this place. Has a nice rooftop terrace with bar, has large, clean, newer rooms. The whole place is very clean. Breakfast is simple but plentiful (cereal, toast, nutella, juice, milk). Good, fast, free wifi all over the place.