Granada is one of the oldest Citys in Nicaragua, and the all-time-rival of Leon. It is possible to go up the Rio San Juan from the Caribic to Lago Nicaragua, and Granada was Nicaraguas Caribic Port Town.
La Liberdad in Calle La Liberdad is a nice, quiet hostel with free Internet an breakfast for 6 USD per person in the dorm.
The Bearded Monkey is a crowded hostel, restaurant, and bar. They charge 5 USD for the dorm with free internet use.