I stayed at the Pensione Hotel in June 2006 with 6 girlfriends in two 4 bed rooms. The rooms were fairly small but big enough for all of our stuff (including a small baby and his 'stuff'). The rooms are very neat and fresh and the beds are very comfortable...oh and the shower is great too! I'd definitely recommend it to anyone else and I would stay there again without a second thought.
The location of the hotel is great...we were right on George Street very close to the theatres and restaurants and out the back door was Sussex Street where Chinatown is. The hotel also has a kitchen & lounge area for communial use. Another great thing was that the rooms were very quiet and very dark...it was easy to sleep in... ;)