I am currently staying in a Hostel called the Yellow Mansion right next to Little India and just a 5 min walk away from all the action and the river with painted houses. In Melaka there is a Friday, Saturday and Sunday night market selling all kinds of items. The food is located at the top end of the market, again all kinds from Chinese, to Malaysian, Sushi, Indian etc
The hostel has 4 room for 3, 4 , 5 or 22 people in the big dorm which is about to have a sofa and computer work station installed in to this room, with a small book exchange, and hold and cold running water. All the room have fans, and air con, but note the air con will be turned on in the large dorm when there are 10 or more people in the room. Hot showers are available.
There is also a washing machine that you can use free of charge just bring your own soap.
For the price and quietness of this place it is great value, as if you go to China town the prices are 15 RM + for a for a dorm room and you are in a quite noisy area, my suggestion is stay here and walk for 5 mins so its quieter and out of the hustle and bustle of the main street.
The unique painted houses of Melaka can be seen here on my flickr account http://www.flickr.com/photos/mchphoto
Prices start at 10 RM per night plus 2RM UNESCO Heritage tax per person per night, as the city of Melaka obtained this in 2008.
The contact details are as follows:
Yellow Mansion Hostel
No.45 Jalan, Jalan Banda Kaba, Melaka 75000, Malaysia
Tel 06 2837779
Web site www.yellowmansion.com.my