I'm an American college student studying abroad for the entire school year in London. Me and at least three of my other (American) friends also studying abroad in London for the year are considering a last-minute excursion to Edinburgh. Out of us, I'm the only one who's been before, and I stayed there with my family as part of a larger UK road trip
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As for hostels, I stayed at the High Street Hostel and I loved it.
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http://www.edinburghfirst.com/accommodation/cateredaccommodation.asp
http://www.edinburghfirst.com/accommodation/accommodationrates.asp
They rent out the dorm rooms over the holidays. It's cheap (when we stayed there in 2006, rooms were something like $20 a night--looks like it's more now, but not bad), you get your own private bathroom, and free all-you-can-eat breakfast in the mornings. (We still miss the breakfast.)
Have a great time! Edinburgh is awesome.
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