I slept a night at the jugendherberge 10-11 august 2005 The service is really nice, and I got a very fresh room (4 beds, non-private) with shower, toilet and lockers to a very reasonable price - €20! Quite a difference from Haus der Jugend, I think, regarding confort. About activities and such I can't say much, but the hostel is quite far away from the city center.
I also did quite was falsches when going there: I went with bus 33 in the wrong direction, leaving me in the wrong end of Heidelberg. But no problem really, I got to see most of Heidelberg with that.
Point to note: Nothing gives so much feeling about a town but walking through it. I didn't walk from one end to another, but I walked through the University part, and I walked from Hauptbanhof to Alte Stadt and back. Just like in Frankfurt, where I've been walking from and to various parts of the central city, I have a good feeling of the city.