Nowadays, if you're willing to stay even just a little bit outside of the Yamanote loop line, and if you know where to look (hint: online, especially if you can read a bit of Japanese, in which case Jalan.net is the place to go), you can get small hotel rooms for the same price as capsule hotels in Tokyo.
I should know: I'm sitting in such a room right now. The place where I'm staying has weekly rates which rival the cheapest apartment room rentals -- which usually have the inconvenience of requiring upfront monthly payments, deposits, and often "key money" and "gift money" (unless dealing with special agencies like Sakura House who specialize in housing foreigners, the first month of rent can easily cost you four times the normal rent, and we haven't talked about the utilities yet)
Since this is
The hotel is split in smoking and non-smoking floors, and there's even a women-only floor. There's a coin laundry on the first floor, nice bathing and toilet facilities (cleaner than most 6000-8000 yen/night downtown Shinjuku business hotels I've stayed in), microwave ovens and hot water on each floor... With convenience stores and 100yen shops close by, it makes it really easy to live on a shoestring budget even in this supposedly extremely expensive city.
And this place is far from unique: hell, there's another one just like it right across the street.
Did I mention the best part yet? Unlike most budget hotels... there are virtually no noisy foreigners here!
Which is why I won't tell you where it is
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"Your stupidity, Allen, is simply not up to par." -- Dave Mack (mack@inco.UUCP) "Yours is." -- Allen Gwinn (firstname.lastname@example.org), in alt.flame