What should I do, and why?
Probably my advice comes too late to do any good, but I'd say: Leave them where they are. Whoever dropped them has a possibility of retracing their steps hoping to find them.
If they don't, their money is as good as lost anyway as it's not individually traceable; so no problem letting it be taken by the cleaning personnel as a bonus for their job of actually maintaining the hostel.
This is my advice as well.
I just found 120 Euro (about $172) on the floor in the hallway in a hostel in Berlin. What should I do, and why?