Thanks to another recommendation (its always a great idea to ask other travellers where they stayed and what they have done) we stayed at Vietnam Inn Saigon in HCMC.
A bed in a 12 bed dorm with shared bathroom and breakfast included set us back 130,000VD/ $7.70 per person per night. The hostel is the perfect place for meeting new people, especially on the roof top bar of a night time while you are drinking your 2 free beers every night. The bathrooms were clean and quite big, the rooms had wonderful air conditioning, lockers for storing valuables and lots of floor space for bags. The front was alway busy so it was sometimes difficult to get someone to help you. They did however help us book our Mekong Delta tour and our bus to Phnom Penh, Cambodia while taking a ‘extra’ commission for themselves.