Been to Malacca recently and found a hostel in Malacca Old Town to be very nice. The owner (they rent the building) is a couple - the husband is an indigenous people and his wife, Gabriel is s Swiss. For anyone who is looking for cheap and nice hostel( basic things such as electric fan (no air-con), mosquito repellant, bath room, kitchen, clean beds and pillows, lovely fat cats, nice pond with fish, convenient in its location)
Sama-Sama Guest House,
No. 26, Jalan Tukang Besi (Blacksmith Street),
Hope this would help.