This hostel, the Iguana Azul, http://www.iguanaazulcopan.com/ was right around the corner from where I was staying and I loved the outside of the building. A friend of mine who was passing through Copan into Guatemala stayed there two nights so I also got to see the inside. For $6 a night, this is about as good as it gets. Very clean, tile floors, garden area out back, nicely decorated and clean, easy walk into town.
Or, if you are not a budget traveler, you could stay at the Bed and Breakfast Casa de Cafe http://www.casadecafecopan.com/ which is owned by the same owners as the Blue Iguana and is located next door. The owners must live across the street because sometimes I saw them carrying food over for the guests. I think they might prepare the meals at their house and then walk them next door to serve guests. The Casa de Cafe has a beautiful garden area, and in fact, whenever I walked by I wished I was staying there.
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