At the end of the day, all three cities (London, Birmingham and Manchester) are much of a muchness in terms of cost, especially if you're looking to do an all in one convention type deal.
Keeping with Youth Hostels for a moment, there's one opened fairly recently in the heart of the Lee Valley Regional Park. Details can be found
HERE.It only sleeps 114 people, but it's relatively easy to get to (being right next to Cheshunt station, which is convenient for Stansted Airport, and a whole 8 minutes on the train from Tottenham Hale station on the
London Underground Victoria Line), and on the other side you've got the 10000 acres of the Lee Valley park, including an Activity centre (which offers Sailing, Canoeing, Climbing, Caving, Camping, Rafting and Dragon Boating, amongst other things) with Broxbourne (home of the Lee Valley Leisure Pool) a short train ride away.
In terms of con space, they've got five meeting rooms. Accommodation is in lodges with 2, 3, 4, 6 and 8 bed rooms.
Not saying that ConFuzzled 2009 is gonna be there, but it's worth a thought for a general "weekend away" type thing.
Cheers,
Southie