Savage Hostel, Koh Tao
A two-minute walk from the beach and surrounded by dive shops, restaurants, and massage parlours, the location couldn't get better than this. The complimentary breakfast is the best I've had at any hostel, beds are comfortable and they have a pool. The main drawback is that they have only 16-bed mixed dorms, which can get a bit noisy when there are big groups getting in after a party in the wee hours of the morning.
I have to mention, I loved the drinks, food, and location (perfect to catch the sunset) of the Blue Water Cafe which is located right opposite the hostel!
Hostel by Bed, Chiang Mai
Super clean, self-service community kitchen, comfortable beds, and great location, I have nothing negative to share about this hostel. It's great for travelers who want to meet other people, as well as for those who want their own space and privacy without spending on a private room or hotel.
The Fern Forest Cafe located next to it is lovely and the hostel is just a short walk away from the weekend night market as well as Wat Phra Singh temple.
There are numerous hostel options that are cheaper than the hostels listed above. I wasn't keen on staying at a party hostel because I like my peace and solitude (and a good night's sleep), didn't want to compromise on cleanliness and comfort, and generally liked the ideas and ethics of the places I finally chose. However, if you are looking to meet a lot of people and like to party, you might find the above selection a bit quiet and not as social as the other popular hostels.
What To Carry
It's best to travel light and a medium-sized rucksack is more than enough, especially if you're traveling in the summer. Since I went to Thailand in June (which is peak summer with occasional showers), I mostly carried light, breathable summer clothes. Some places can get chilly at night, so it's useful to have a pair of trousers and a light pullover (also useful on flights where the A/C can sometimes make you cold).
Most temples require you to wear clothing that extends to below the knees, so having a pair of cotton pajamas is useful (can also be bought in Thailand). Shorts, skirts, dresses and cotton t-shirts work wonders, and most hostels have laundry service or a washing machine, so you don't have to carry too much.
Be sure to pack a quick-dry towel, pocket-raincoat or light umbrella, a hat, sunscreen, and sunglasses. Walking shoes or a good pair of floaters are useful because you're likely to be walking quite a bit and would want to avoid blisters.
Carry a cloth bag or day bag for shopping so you avoid accumulating plastic bags, and a swimsuit if you're going to a beach place or have access to a pool.