The Domschatz is a beautiful little hotel located at the foot of the Castle. An easy 10-15 minute walk from the Bahnhof, it is just where I like to stay: close to all the attractions, but not in the noisy middle of them. My room was quiet and extremely clean with an excellent bathroom, TV, and speedy wireless Internet. The breakfast was delicious, too, and the hosts were oh so pleasant.
Don't be alarmed! The name of this place comes from being along the street called Hölle :) I made a daytrip to Quedlinburg but if I was to stay the night, this might be my place of choice simply because it is in the pretty and quiet yard of the Schuhhof (see sights tips). This means a quiet street, yet minutes away from the market square. It is only a small place so booking is essential. The 1780s half-timbered houses have small apartment style rooms (even if you book a double room) with amenities and with fridges so this is no ordinary style hotel. Maximum occupants per house is six people. You can see pictures from inside in the link below.
Half-timbered prettiness in historic alley.
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