private accomodation
A good way to stay in Krakow is to rent private accommodation. You can usually get a one bedroom for €60-€90 a night, located in the Old Town. There are two agencies opposite the main railway station offering rooms. If you hang around the street outside the agencies for a while, some landlords will approach you and make an offer. This saves you the commission, but may be a bit unsafe.
hostels
There are plenty of decent clean backpacker hostels in the Old Town and Kazimierz.Expect to pay 40-60 PLN for a dorm bed, including breakfast bread, jam, and cheese, laundry, sheets, lockers, and internet.