I can't offer any advice on specific hostels / guesthouses.... but I can tell you that you probably want to stay in Pham Ngu Lao St of Saigon (District 1)... it is packed with cheap hotels, travel agencies, bike rental places... and foreign dominated. I'm sure that you can find a hotel there in your price range, and it is in the center of the city close to everything you will want to see.
Agreed with Rogdog. That area seems like a hub is for foreigners. Pham Ngu Lao, Bui Vien streets. You can find very reasonable hotels, travel agencies, bike rental... Especially, you can use English with the Vietnamese there.
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