Well, if traveling solo, I always say hostels are best. I had a recent experience in which I went to Orlando, FL...and initially, I had made a reservation at a hotel. I was planning on spending my days there at Disney with a friend who worked there...but then when I arrived, something came up, and we had to cancel our plans. Luckily, I had booked into the hostel rather than a hotel...because if I had been at the hotel, my days would have been so very wasted (since it's so easy to meet people at hostels).
If you're traveling with a significant other or with a group, and aren't that interested in meeting fellow travelers, a hotel can definitely work out less and provide more comforts.
You're right in saying that even with a significant other or with a group, places like NYC are still usually cheaper to stay in a hostel rather than a hotel.
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Regards,
Matthew
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