Hey Bec, welcome to the group

!
Interrail passes for Spain only travel are NOT a good idea and I would personally avoid them like the plague
Why you ask? Basically because the rail tracks are not the best nor the fastest way to get around Spain, the bus is almos always faster and cheaper.
See the following threads that talk about the train -vs- bus thing in Spain:
1)
Thread on San Sebasti�n and trains -vs- busses.2)
Best way to move around threadAll in all, the rail network is often poorly mapped out and it can take up to 5x the time to gewt from point A to point B by train than it would via bus (and trains cost more as well).
I did what you are planning years ago and in 2.5 months backpacking around Spain I hit over 60 cities

I found that it was MUCH cheaper and more convenient to leave it open and flexible and ended up taking the bus 90% of the time.
The only trains that might make a rail pass worthwhile would be the "Talgos" or the "AVE" high speeds but last I checked the AVE was not included in rail passes or there was a whopper of a suplement on it and other super fast "Talgos" "see
the RENFE website for more on the AVE and "Talgo" trains).
Ok...
quote:
"Also, whats the deal with booking hostels - can i just arrive in a place and expect to get a bed somewhere or is it better to book in advance??"
... is the age-old question and all I can say is that if you want to be ASSURED a place to lay your head down, make reservations. Transportation can be left to chance but if I were you I would make as many hostel reservations as I could. If you make reservations and decide to cancel them, you wil not be charged for the first night as long as you give them 24-48 hours notice (exact advance notice depends on each individual hostel).
When I was travelling around, my ex-gal and I had a
CELL PHONE 
and would call cheaply to make reservations in one hostel days before were to arrive. For example, if you are in C�rdoba ---> Sevilla ---> Granada ---> you could make the res. for Granada when you arrive in C�rdoba (a few cities before). Of course, the earlier the res. is made the better. I would take the major cities you plan to hit and make hostel reservations before you leave home.
Saludos & have fun,
jer...