I stayed at Red Hostel for a couple of nights and I found it quite satisfactory. The beds were comfortable, breakfast was nice and filling - and I also managed to meet a fellow traveller whom I hadn't seen for 2 months and never anticipated to meet again :)
The bathrooms could probably use a little spruce but only in terms of paintwork and ventillation. I can't say anything bad about the water temperature or pressure. I found the staff to be very helpful and informed.
As a solo traveller I really enjoyed the common area and the possibility to meet new people.
All in all, I would definitely recommend Red Hostel to all budget travellers.

Pay in US dollars if you want to get the best rate. I paid $380UY to stay here which worked out to be well over the advertised price of $16US per night. This is a huge place with a nice terrace. However, the kitchen is on the roof and forget about using the fridge. It's padlocked. The mattresses are like sleeping on a padded gym floor - quite uncomfortable. The staff was friendly, but I was awoken before 8AM to the receptionist and maid breaking apart wooden crates right outside my room to feed the fire they had going in the living room. Overall, I'd have to say this place isn't worth the price, but it's clean enough. The breakfast was adequate.

I had two different bookings here, but somehow the first got screwed up. So I changed rooms three times in two nights. Many thanks to both Fernando and Max for sorting everything out. The rooftop terrace is awesome! But the bathrooms could definitely use a complete overhaul. It can sometimes get very loud at night when the music is blasting from the rooftop. So you might want to ask for a room in the other part of the hostel, which is much quieter. A good hostel in the heart of Montevideo.

Don't go here. This hostel allows groups and can't deal with them. They were partying the whole night on the roof terrace. While complaining I couldn't sleep at 2am nothing was done. Besides that they let people of the group sleep in dorms with others and in my girl dorm slept a boy!
Showers and toilets are terrible. Beds were ok though.