Definitely spend a good amount of time in Krakow, its a beautiful city! Try to hit the Wieliczka salt mine (30mins south), and the Tatra Mountains--Zakopane (2hrs south). I don't have much experience with Warsaw--(I've been to krakow 8 times as opposed to 2 in Warsaw), but I think i prefer Krakow. Best advice is just to hit the town square or the castle and then just explore--randomly going into churches, museums. LOT is definitely a rip-off flying within Poland and train service is more than reasonable and pretty quick. You can get around with English pretty easily--Polish people DO NOT enjoy speaking Russian (USSR subjugation etc.) although a lot of the older generation does know it. Enjoy your time in Poland!

PS Krakow is much prettier and better conserved thank Gdansk.