The hostels are a great option, I've stayed in all of them and the Jasper one is the only one I would avoid (plus it's at the top of a big hill). Last year I made reservations 2 - 3 weeks in advance for a Sept. tour and most had lots of room. However try to find out when the weekly "Tours" are scheduled to come through and avoid those dates, i.e. the "Moose Tour" from Vancouver and the "North West Tour (?)" from Calgary which bring as many as couple of dozen 20 something year olds, mostly Aussies intent on drinking and partying as much as possible. They take the hostel over, make a mess, and are noisy late into the night. The Hostel managers hate them but they have become essential to the financial survival of the hostels.

My favorites are Beauty Creek (too small for the Tours and they have an "all-you-can-eat-pancake-breakfast"), Rampart Creek is really nice with a sauna and Mosquito Creek which has a sauna also. Lake Louise is more of a "resort" than a hostel but is a nice base for a few days. I think that most people would have a much better time at the hostels than staying in a hotel.