If you're traveling with a group of four or more, I would highly recommend staying at the hostel on Grammercy.
The vibe was very laidback, and if you're familiar with hosteling, it's pretty standard for hostels.
I recommend the neighborhood, only if you're very street smart and can walk confidently. Exude a street tough, seasoned traveller, New Yorker/San Francisco vibe and you'll do fine.