IMHO, Lima is one of the most unimpressive South American cities I've visited. Just keep going on your way to Cuzco, which is a lovely little town. I also highly recommend hiking the Inca Trail rather than taking the bus. You arrive at Machu Picchu hours before the throngs of tourists inundate the site. Watching the sun rise in the Andes and shine first light on Machu Picchu is an image that will stick with me forever.

Here are full trip reports and photo albums from hiking the Inca Trail and arriving at Machu Picchu.