The Posada del Angel is a place to spend a few days for a few days in this in the magic city of Colonia del Sacramento. It has external and internal standard rooms and superior. Prices range between $US 75-105, - i included in the room rate is tax and American breakfas. It's a good place to enjoy an excellent stay.
I came here in high season, and it's one of those hostels where you need to be a deep sleeper or you'll be kept up all night by the opening and closing of doors. On the other hand, if you want to party, you won't lack for company! I was in a shared room, but the hostel also offers single or double rooms that seem to be quite decent. If you have problems with damp and mould, it's important to ask for a well-ventilated room, as some of them have quite a strong smell. This doesn't usually bother me, especially in the type of old buildings you'll find in Uruguay, but it could be a problem for some. The staff are attentive and lively, and I had a very positive experience. It is well-located, easily reached by public transport.