To be honest, yes, Phnom Penh is (my) the least favorite Cambodia city for myself. It is much more expensive compare to Siem Reap, Battambang, Sihanoukville, Kampot and Kep. I am talking about accommodation, food and beverages and also entertainment and transportation.
I stayed at Velkommen Backpackers for USD5 per night in a massive 18-beds dormitory. On the top floor (4th floor), only fan and 2 bathroom/toilet. There are plenty of other backpackers’ hostels or guesthouses but apparently, Velkommen was the cheapest one. It located not too far from the riverside and within walking distance to other tourists attractions like the palace, market (not Russian market), bus hub, restaurants, bars and many other.
Hangout with bunch of backpackers from the hostel and visited the nightlife which in my opinion, pretty sketchy, dirty and sleazy. Not any better than Sihanoukville.
If you want to visit other attractions like The Killing Field, S21, Russian Market, etc. you need to hire a mopet or take a tuktuk. Riding a mopet or bicycle in Phnom Penh was pretty alright. It wasn’t that bad, to be honest. If you scare of crazy traffic, just go during non-peak hour. You’ll be safe.
After 5 nights, I managed to couchsurfed at Niall’s place – Flick2 – the mini cinema cum restaurant/cafe and bar. A business owned by Niall, an English guy with his partner, a Cambodian. I stayed there for 3 nights before heading out to Sihanoukville once again.