I spent a week at Hotel Ajau recently and couldn't recommend it more highly. I chose it because it's economical and comfortable; I stayed because the internet signal reached my room, the folks were friendly and I discovered that the owners are doing everything they can to be a truly sustainable business. Read about it and see photos here:
http://theesperanzaproject.org/es/2010/05/hospitalidad-verde-en-guatemala-hotel-ajau/
You have to know the neighborhood is sketchy, as with the rest of Guatemala City's historic zone, but watch your things in the street and don't go out at night without a taxi, and you'll be fine. In fact, that's another good reason to stay at Ajau: There's a good cafe, so you don't have to go out at night.
- Ajau Hotel Guatemala City
