It will be cold and most likely wet in Feb, but it's a great time to travel - not so crowded and you'll meet tons of locals. Hostels should be no problem for booking, although some of the more resorty places may be closed...we had a tough time finding accommodations in parts of Greece in March. If you can get a cheaper flight into northern Europe (check SAS, they sometimes have 2 for 1 fares in the winter, for about $700 total) you'll lots of little guesthouses with very few guests and some great out of the way places. Much to our consternation, our ten year old daughter has recently taken to rating places with regard to their "wedding" potential - cool places to hold weddings, that is. She has assured us that she's not planning anything, to our relief. Anyhow, we recently visited Giesthoorn, in the Netherlands - a pretty little town with no roads, only canals. Popular with local tourists, not so many from overseas. We stayed in Raalte, which we really enjoyed - laid back and fairly inexpensive. Smaller towns are a good way to go to avoid spending big bucks, but you can stay near a main city and commute in to see the sights.
Another tip, the Etap hotel chain (throughout most of Europe) offers basic accommodations (with private bath) for pretty darn cheap - we stayed in Paris for 43 Euro/night, in July. Don't know how that compares with private double rooms in hostels there, but it's another option for you. The Formule 1 chain is even cheaper (around 30 Euro/night) but don't have private bathrooms. Still, a contender.
I'd definitely recommend staying in a private guesthouse at least a couple of times, you'll get to see a different side of the country (they're often in small villages, farms, old castles and whatnot) and generally eat great food and enjoy comfy rooms for a lot less than a similar facility in a big city.
Since you have time, I'd recommend writing to various country's tourist info offices, asking specifically for info about guest house accommodations. You should get a pretty comprehensive brochure to help you find just the thing.