The folks at Mingtown also have a hostel in Shanghai. It’s within walking distance of People’s Square, Nanjing Street, which offers lots of shopping, and several museums. I think it’s an easy walk to the Bund as well. It’s very affordable and there’s a café downstairs which has wifi and is a relaxing place to hang out.
I stayed in a dorm room and it wasn’t spectacular. No decor to speak of. Two dorm rooms share a shower, toilet and sink (all separated and tiny). Still it’s not a bad option for Shanghai. The worst thing is there are no locks provided for the lockers. I never experienced that in China – so bring your own, or put all your valuables downstairs at reception.