Hostal Copacabana (in LA PAZ, not near Lake Titicaca) is a very good hostal. It actually feels more like an hotel than a hostal. I had a single room with private bathroom, which was very clean and with reliable hot water.
Breakfast is included (although a bit light: bread, juice and tea) and it is very conveniently located near the Witches' Market. The hotel seems to be popular with Brasilian travellers.
There is wifi too, but it does not work well in the rooms (but well in the foyer).