Hi
Lots of terrible places in that area!
The following are all pretty inexpensive for London, and recommended in the Rough Guide to the Best Places to Stay in Britain on a Budget.

Caring Hotel – near Paddington, clean, good value, nice location.
Lincoln House – nearer Marylebone/Marble Arch. Characterful, but variable. Check what kind of room you’re getting.
Portobello Gold – Notting Hill area. A backpackery, funky option, on Portobello Road. The rooms are simple, and have seen better days, but has a lively bar/restaurant downstairs.

HTH
Sam