Firstly, there are some really idiotic 'terrible' ratings for this place. If you do some research before your trip then you'll be a lot less disappointed by your own over estimations. Secondly, if you want hotel standards then book a hotel.
Anyway:
My girlfriend and I stayed at Inner city for 2 weeks over Chinese New Year 2013 and were made to feel at home straight away. We got sliced fresh dragon fruit one day and even got invited to their dumpling party for the actual eve which was brilliant.

We had a little bit of confusion with finding the place but once we were there everything else was fine. We highly recommend this place to anyone looking to stay in a hostel in Beijing, particularly if you want to see the real side of life in the area. 15 min walk from subway.

We stayed in innercity for four nights, then we left lots of our luggage with Sammy (she had no problem with us doing this and we felt very safe leaving our stuff in the hostel) for one night when we went to stay by the wall, then we came back for one more night before flying to Xi'an. The help provided from Sammy with booking other hotels, looking for places to eat, calling taxis etc was simply above and beyond what you would expect in any hotel, and here you are paying such cheap prices and getting all this personal service included for nothing!! She really left a lasting impression on us.

Staying in this hostel means you really get a chance to see a part of real Beijing life, staying in a real hutong you can watch all the locals leading their everyday lives and there is a fantastic market directly opposite the hostel where you can buy fruit, veg, warm breakfast treats, as well as buy some good warm thermals and hats and gloves that we certainly needed when we arrived in minus degrees!! And it is all so cheap (a pair of thermal trousers like none I have ever seen cost only 30yuan and kept the cold out better than my fancy thermals bought in New Zealand!)

My brother and I stayed in one of the dorm rooms, it was small but it only had four beds so it was never too busy and was kept warm at all times with a locker provided for everyone and lots of electrical sockets available. The wifi connection here is brilliant I used Skype a lot and never lost connection, better connection than anywhere else I've stayed so far.

We were sad to find the main communal area and kitchen were closed because of the cold weather as we had seen a lot of pictures of these areas and it looked so nice to relax in but there was still a cosy little reception area with sofas and a tv that you could use.

The location perhaps isn't as close as you could get to a lot of the main attractions, but there are so many options of public transport that are all easily available in the area and Sammy gave us a handy little sheet that explained to us the number busses/tube lines we could use to get to the main sights.

All in all, any inconveniences of the hostel are overridden by the service you get here.