Once we visited Isla and decided to move from Cancun, I read reviews and decided to check out Osorio. We were blown away by the price - 300 pesos (about $25 US right now) for a very basic room for 2 with no A/C. They did offer rooms with A/C, fridge, & tv for 500 pesos (about $42), but we were planning to hang out mostly at the beach and in town, so we opted for the budget route. We got exactly that - very basic, but clean, with friendly staff. Great location right in the middle of town, close to beach, ferry, restaurants, etc. I slept fine at night, but we did wake up early in the mornings thanks to some nearby roosters. Would come back if I wanted a very good deal!

We traveled with a group of 10 adults, ages 22-72, to Isla Mujeres for a week starting Dec 31 2010. The Osorio has a big wonderful roof-top terrace where we spent cocktail hour every evening. There's plenty of room to play games, hang up the clothesline, use the internet from the restaurant across the street. The rooms are clean, not fancy, but who wants to spend vacation watching TV in an air-conditioned room? The hotel is located 2 blocks from the ferry, about 3 blocks from the North Beach & 2 blocks from town square with nightly basketball games. It's hard to make a real reservation (we did have a Spanish-speaking friend call since our group was big). Rooms were 300 pesos per night, 500 pesos for AC/TV/mini-fridge room & we were there in the high season.

Stayed there one night, but would have add an other one if we didn't have a reservation in an other city the following night.
The hotel is well situated on the Island, not even 2 minutes walk to the beach, scuba diving shops (try Oceanic), bicycle rental shops, and many restaurants (try Picus).
The family that owns the place gives a great service (only in Spanish) and accept to keep your luggage even after check-out.
The only suggestion would be to do some work in the bathroom since ours had some mildew problems and unsafe apparent-wires lighting connections (just on top of the shower).
Besides that, we really recommand this place that present a good quality-price, especially for this highly touristic location.

The hotel itself is clean and well maintained. However it only has shutters as windows so it can be a bit noisy from about 7.00 on with the traffic outside, or earlier with the Americans. Good location, pretty cheap , generally good if you don't mind getting up early as it's very quiet at night.