I live in Montreal but only until this Friday ! I've never stayed in a hostel here but can give you this link
to help you find a good place. I did check before writing this post and one or two hotels might not be central enough. Just send me a private message if you're not sure.
There is one on Mount-Royal Street, that's in the heart of the trendy artistic quarter of the town. Very much alive, and a few minutes away by metro from downtown. If you don't fear living in the middle of the french area... we don't bite you know...