I am planning to travel in Spain between April and May 08'. What is the best way to travel within Spain-train?

I will fly into Spain and I would like to visit 3 major cities. Where should I stay? Are student hotels ok to stay in?

Absolutely. Trains, unless you need to get somewhere they don't go, then take the bus. The trains are smooth, efficient, regular, and modern. And if you're only going a few cities, check the Eurail website, and get your pass (according to what works for your plans) online. Totally worth it!

Student hotels? What does that mean? There are Hostales all over the place, clean, and neat, and, unlike my first experience, you actually get to have a bath IN the room. Youth Hostels, where available, are good, too.

Which cities are you planning, and how long are you staying?

ww.renfe.es is your page for the trains. Otherwise, the first answerer is definitively right!