I stayed in the YHA hostel in Carcassone and highly recommend it. It is an experience being able to stay within the old city walls.
There is also a YHA in Montpellier which I did not stay at. We arrived in the afternoon and couldn't get a bed so you may wish to book early here.
More info about these can be found at this website
In Avignon I stayed at 'Hostel Bagatelle' which has camping as well as hostel accomodation. It is right on the river and you have to walk across the bridge into town, it is no frills but a cheap sleep.