To be fair the negative reviews that I've read here are pretty much spot on, but that doesn't necessarily mean that the overall review needs to be terrible, or that it's not a suitable place to stay. I took the small room (number 2) - others might be different. Let's look at a couple of points:
Room standard and cleanliness - frankly, not great. There were a few bugs crawling around the bathroom, but nothing major. The place could have used a better sweep, and there was hair around in the bathroom, but the sheets were very clean which is always a good sign. There was AC, but it took me a while to figure out that it was blowing cold air and not just circulating the existing air - if you need your room cold, then it's no use - Personally, I prefer a moderately warm room (25-27 degrees), so it was fine for me. There was a television that I didn't use and lights beside the bed that didn't work; apart from that, the room was pretty bare. There was a weak wifi signal that worked (just) by the window but not 2 meters away on the bed.
Security - pathetic. The owner had told me that there was a safe box - there wasn't in my room (the small room), although maybe he has one in reception. The door lock was a joke frankly. Since I was expected to pay 1000 baht if I lost the key, I decided to leave it in the room and use a cardboard business card instead - seriously! - you could open the door in less than a second with a cardboard business card, not even a plastic credit card. There was a bolt on the inside for when you were in the room, but anyone who felt like walking in an taking things while you were away could easily do so. I did not have anything stolen, but I would not feel comfortable leaving valuables there.
Service - Konal, the owner seemed like a decent guy, genuinely trying to do his best to please customers. However the staff in the restaurant are pretty useless, and they seem to be "responsible" for the guesthouse too, but it's clearly an annoyance for them. One of them in particular (maybe his son / nephew?) is just plain surly. I didn't see a single smile from any of them, nor any desire to help customers in any way at all. I did see customers leaving in frustration at the lack of service though. When I came to check in, I was told to come back in an hour or so and when I also tried to check out at 8h30, there was nobody to be seen - everything closed up and boarded. However, as I said, Konal was good and helpful, we communicated by SMS and all was fine - he was easy going about me leaving my bag in the room after checking out and also borrowing a towel for my boat trip (after the checkout).
Food - I cannot vouch for the standard of the food since I did not eat there, but I can say that it takes a while to arrive judging by the customers I saw cancelling their orders and leaving. Having seen the kitchen / washing up area, I'm glad I didn't eat there!
Noise - Yep, it's true, you will not be able to sleep before 1am even with Ear plugs. However, if you're planning to stay out for a drink or two (the beach bars go on until much later), then this is irrelevant.
Value - well, this is not bad I guess. I paid 1300 in high season, which is about half the price that I paid for one of the "resort" type places on the previous night, where the noise from the beach bars was audible at 3am or later. Sure the standard was lower than the resort, but the location was better for me, and at half the price. In Phuket, or Krabi, this would be a 500 Baht room really; however prices in Phi Phi in March are high.
Summary. If you're looking for a fairly cheap place in the centre of town, don't need to sleep early, and have no expectations for service, security or cleanliness, then this place is actually a decent option. However, if any of the above things concern you, then you're probably better off spending a bit more and heading elsewhere. Personally, I think I can get a better deal elsewhere.
This review is the subjective opinion of a TripAdvisor member and not of TripAdvisor LLC