It is good to know about this possibility for Madrid and especially Barcelona.
But I just got off the phone with a couple of agencies here in Madrid and they have agreed to let me book some furnished, no frills, individual rooms through them for 15 euros a night.
The actual breakdown for these Madrid rooms (
www.madrididrooms.cjb.net) is 130 euros rent for the first week (one week minimum stay), 100 euro security deposit (returned when you leave) and then 15 euros a night for any additional nights.
These rooms compare to hotel or hostals room stays and give you the flexibility to either extend or leave when you want to without losing your security deposit plus more importantly give you the time you need to sort things out for yourself.