Tallinn is suddenly on many traveler’s lists, and the tourist infrastructure is expanding rapidly. The city straddles the relatively cheap zone of the former East as well as the insanely expensive zone of Scandinavia, so it’s no surprise that prices here are mostly somewhere in between.
There are some good bargains at hotels in Tallinn, and standards are fairly high, at least in the 3-star and above ranges. Hostels in Tallinn can be quite cheap, and most of them have affordable private rooms that are a good alternative to the 1 and 2-star hotels.
Fortunately, most of Tallinn’s main attractions are either free or quite inexpensive, so the primary costs of your trip will be the airfare and hotel. The Old City and various cathedrals around are popular and always free to enter.
Food and drinks are relatively cheap by European standards, and especially by Scandinavian standards. You can find filling meals at casual places that should fit into a backpacker’s budget, or get a lot more quality for a much higher price at the proper restaurants.