While my friends and I were in Madrid in October 2005 we stayed at the Best Western Carlos V. We shared a triple room which was very clean. The beds were comfortable; the bathroom was spotless and the towels nice and fluffy.
The hotel staff was very nice to us. The only thing we "needed" were additional towels (of course!!), which were given to us without any problems.
The hotel is small - only 67 rooms. The elevator is very, very small! We found it to be cute. The breakfast was free and quite good. It consisted of lunchmeats, cheeses, some kind of potato thing (which we liked) and some other fare I've since forgotten about. Some pastries and cookies, too. My one friend LOVED the coffee. But she loved it everywhere in Spain. I believe she said it was the best EVER.