I've stayed in hostels all along the east coast, but Backpackers Inn has been one of the best by far! It has such a great and welcoming atmosphere, and the location itself is fantastic - only a few seconds walk and you're at the beach. The rooms and kitchen are clean, and the common area is sociable.
If you want to have 24/7 beach access, this is the place to stay in Byron Bay! They have their own path that leads straight to the beach. The kitchen area is large and cleaned every day. The social area is perfectly set up for meeting others. I found that this hostel was the easiest to meet people at because of the set up of the common area.