I stayed in this hotel as part of a Tucan tour on two separate nights during Jan '11 and as such stayed in two separate rooms with a vast difference between them.

The first room was on the ground floor. It had three beds - a double and two singles, and looked as though it had originally been one tiny room with a single bed, joined with another room. There was a door [partially covered by an attempt at a wardrobe] at the end of the third bed, which I guess was the orignal entrance to the tiny room. Unfortunately, they've left the glass top over this, now unused, door so that if you sleep in that bed, you're bathed in light all night long and kept awake.
Two other things also kept me awake - the massive amount of hotel-noise and the mould that was growing up the wall over the bed I was sleeping in.
The latter made me wheeze and therefore wake up several times to pop anti-histamines as the night wore on.
The noise was more or less constant throughout the night - even the phone from the reception area woke me up when it rang - and we were one of the farthest rooms from the reception area.

The bathroom was grotty - and the shower door was almost off its hinges and difficult to close.
When we arrived in the room, they had given us one, yes ONE, small towel for two women meaning that we had to walk back to reception to get others. Not very good service.

The second room I stayed in was much nicer. it was on the second floor, but sadly there are no lifts, so that means a bit of luggage hauling!
The noise was about the same, but it was cleaner than the first room.- and the bathroom was less grotty.

Other people I stayed there with had issues with noise too, and also with clothes having been shrunk that were left with the hotel for laundering - so beware!

Overall, the only positive was the location, and I think that Tucan land their clients in this sort of poor accommodation to boost their own profits, which is very disappointing.

The hotel is just minutes from the Plaza de Armas in a great location overlooking a beautiful square. In value for money terms and bearing in mind how overpriced many hotels in Cusco are in high season, this is probably about as good as it gets. However... the rooms were very basic and in serious need of refurbishing. We changed room immediately as the first one allocated was more like a cell - dark, nowhere to hang clothes and very old fashioned. Our second room was not much better, small and gloomy.
The hotel breakfast was pretty poor with stale bread most days. Whoever the decorotors were who painted the central courtyard should never have been paid - their work was laughably bad. The staff were friendly enough although sometimes they neglected to clean the room or leave fresh towels. One bed was literally falling apart and and the squeaky bedframe was not conducive to a good night's rest.
If you're on a limited budget then perhaps you could deal with this. If you are thinking of booking it through Toucan Travel, recommended by Trailfinders in the UK - don't bother, it's a rip off and most people would prefer something more comfortable when staying in such a beautiful city.

Even if you have to pay more, stay away from this hotel.

Small room and bathroom. Very tired hotel... old furniture, old sheets and towels, old stained linolium flooring. Also there is no sense of any convenience features or asthetics at all (they could have provided better features with not much additional cost). (ex. one couldn't reach the toilet roll from the toilet seat, the shower was facing the enclosure's door). The sheets were clean but were stained, the towels were small; they gave us one little towel each and no napkins.

On the plus side, the staff was friendly, but it seemed it was totally individual trait, not really trained by the management. The included breakfast was so-so and the service was slow (with replenishments). Only one person was cooking eggs and replenishing the limited buffet; so, if you had less time, you either missed the full breakfast or your sightseeing trip!

We actully tried moving out after two nights to a different hotel for the next two nights, but since we had prepaid through our travel agent and communication was a problem with the TA, we were stuck to this hotel.

Bottom line... AVOID

This hotel is quite good, I am surprised at some previous comments! The rooms and bathrooms were quiet, clean and comfortable. The staff are generally friendly and helpful. It is in a great location within walking distance to all the main sites in cusco and breakfast is available for 7 soles, although there is not a lot of variety at all. Laundry facilities and internet access are available on site. A good, basic hotel!