Its either, depending your preferences. I love them! Three best ones I have visited are Big Bazaar Road in New Delhi, Khao San Road in Bangkok and Thamel in Kathmandu. My first visit was in the last one, arrived Kathmandu at night and got taxi to hostel through sleeping, dark city at early morning hours. Next day after sleeping jet-lag off, I walked into a noisy chaos of people, animals, scooters, cars all blended to one living mass on narrow and dirty roads. I got complete culture shock, never ever experienced anything like that! Honestly felt like running back in, hide from it!
While Thamel is whole area of old town, two others are streets, spreading to side streets and neighborhood. All have multitude of street shops, hawkers of varying degree of pushiness and skills of convincing you buy their product. Hostels are plenty but don’t expect to find Hilton and likes from among them! Cockroaches, rats and other funny pets are part of the bunch. So how can anyone willingly stay in such places, like them? For me its the Asian atmosphere, mix of cultures and races, total world apartness from sterile and over planned West, multitude of photo opportunities. Most interesting people, other backpackers you can find from there. All the life and creatures passing in front of your very eyes, its mind-bogling! Thats why. @ Bangkok.