The Kingsgate is a good buy. We visit Melbourne at least once a year and although my Dad usually shells out for one of the more expensive places, one year I stayed at the Kingsgate when I was by myself and I was happy. Awesome location, great value for money and while the rooms are pretty basic, they're clean and of a good quality.
http://www.kingsgatehotel.com.au/
They also have the option of an "economy room" if you're looking for something even cheaper.
Don't catch a taxi from the airport -- it will set you back about $40. Try to catch the shuttle that drops you at Spencer St Station (about 1 block from Kingsgate Hotel) which I think from memory is $21 return.