There aren't too many other options in Pasto, in fact this is the only hostel we could find. It's overpriced but absolutely fine for a layover on your way to/from Ecuador.
La Casona de Lili is a hostel that goes above and beyond - you'll feel right at home, and cook up some great meals in a kitchen to die for!
Hotel Miramar is a popular place to spend a night or two before heading off to one of the many attractions nearby, but whilst cheap, it is not terribly cheerful.
Veteran of the Ometepe hostel scene, Hospedaje Central attracts a variety of travellers. Some of the rooms need an upgrade to justify the price but we have paid more for less elsewhere on our travels.