I stayed here in the early days of March 2013. Dave and his wife are swell owners, the staff attentive, the food good, rooms in perfect order, WiFi fast enough... Much like the old hump, the entire place is an excellent place to relax and make friends. And that is what you come to do in Dali, after all. The location is a bit isolated from the old town, but nothing is really far away in Dali. Besides, it makes for a better starting point to walk up Cangshan.
Stayed here for three nights over National Day, and it was great. It's brand new, so all the rooms are nice, large, and bright, and besides that the hostel has probably the best internet I've had in China as well as lots of games and books, TV/DVD's, and possibly the only pool table in Dali. Dave, one of the owners, is very friendly and usually ends up hanging out with guests at night, talking and playing chess or pool. They also were great about arranging travel for us and they have a fairly good restaurant.