I've stayed A LOT of hostels and for the most part, I've usually had great experiences! (sometimes, it's the little things that make for a great stay...fully stocked kitchen: yippee!!)
One of my worst hostel experiences was in Belgrade (granted I got sick and it didn't stop raining, so it exacerbated my dislike of our lodgings). We stayed at a hostel near the bus station (which made it a bit sketchy) and it was only three rooms (one of which was the 'reception' where the lady smoked like a chimney, making the whole place reek of smoke 24/7)...It was called the Downtown Belgrade Hostel...I really didn't enjoy my stay, but it could have been my frame of mind as much as anything...
I've also had really bad luck with the Hostelling International hostel in Fez (when I was living in the city and waiting for an apartment)...there booking policies were ridiculous (hopefully they've changed!). I wasn't allowed to book a room, as they were waiting to see if any groups would check in. So each day I would have had to take all my things with me and come back after 7 pm when they reopened to see if they would have rooms that night or not. They also had three lock-outs every day!
The worst place that I ever stayed (and I went to it expecting it to not be good) was a 'hotel' in Bizerte (Tunisia). It was very cheap $10/person/night, so I was not expecting anything even remotely wonderful. However, my roommate sat on her bed and it broke (she is hardly heavy), the only bathroom was infested by cockroaches (so big that I could see them without my glasses on ...and I am quite blind) and (there were five us, so we had a room for 2 and for 3) two of my friends had a window in their room that looked out into the hall (where all of the sinks were), but it could be opened and closed from the hall, and several men peeked into their rooms...needless to say they didn't sleep much that night! I can't remember the name though!
(Sorry for the run-on sentences...it's a bad habit of mine!)