Being a popular destination for Japanese travelers, Matsumoto has the full range of accommodation options, from a backpackers' hostel up to high-end hotels. I'm not a high roller, and I quite enjoy capsule hotels, so when I was looking for a place to stay I was happy to find Hotel M, both central and inexpensive.
It's very conveniently located, just a couple of minutes from the station and immediately next to the bus terminal. It's in the same building as a big Maruzen bookstore, a good place to pick up souvenirs such as stationery, both cute and traditional. (If you're on more of a budget, you can get cheaper gifts at a hundred-yen store in the same building.) After the store closes at 8:00pm, you'll need to use an entrance at the rear of the building.
Step out of the elevator on the 6th floor and the first thing you do is take off your shoes (and socks, if you're me) and leave them in a locker close by. The helpful reception staff speak some English and have a printed information sheet in English; reception is also where you leave luggage which won't fit into your assigned locker, which means anything larger than a small day pack.
By reception there's a spacious lounge where you can watch Japanese TV, make use of the free Wi-Fi, or practice your Japanese reading with a newspaper or a pick from the manga library. This is also where breakfast is served - when I stayed it was a buffet with a mix of western and Japanese food, excellent value at JPY500 - and there are snacks and drinks available for dinner.
The capsule area is very swish, dimly lit and done out in a classy, modern design that's easy on the eye. The actual capsules are marginally more spacious than most - I should probably actually say less cramped - but still with firmer, thinner mattresses than many western visitors will be used to. My pro tip is to get in early to grab one of the limited number of bigger pillows, because the ones in the capsules are pretty thin. The little shelf and USB socket were useful to have, the level of comfort, reasonable.
The mens' bathroom is well fitted out, and has a few private shower booths for shy types who don't want to parade around naked. The shared onsen bath has a nice mosaic of what I assume are the mountains around the town, but was markedly hot every night, probably very cleansing, but not very relaxing. I can say from experience that it's best to follow the instructions correctly for the combination lockers - they are given in English - to save having to ask someone from reception to come and open it for you. I didn't check personally, but the map and information tell me that the womens' area just has a shower room, no onsen bath.
Matsumoto is a compact place, so it's an easy ten- or fifteen-minute walk to the main sights of the castle and art museum. On the way to or back from either you could stop for a snack or browse the shops on charming 'Frog Street' or Nakamichi-dori, with its preserved historical houses. Closer to the hotel there's colourful Fukashi Shrine and neighbouring Zenkyu-In temple, home to some unusual, impressive Buddhist statues.
There are capsules and cabins (capsules in their own small room) for both men and women, and a small number of guest rooms: capsules start at JPY2980 a night, cabins JPY3980, single and double rooms JPY4980, twins JPY9800. For the convenient location and facilities, this definitely represents good value for your yen.