[QUOTE=ozzie][QUOTE=cruising]
The Monastery in Cuzco is a stunning hotel, as the name suggests in a former monastery (Orient Express Hotels). If you have time it's as well worth staying one night at the Sanctuary, the only hotel right in Machu Picchu. True, it's expensive, but it allows you to go and see the ruins in the morning before the hordes of tourists arrive.
Or you could do the right thing and walk for three days along the Inca Trail.... it's a far far more rewarding experience than catching the train.
I wouldn't recommend doing the trek in January though (rainy season); I did this several years ago and we were hiking through clouds/mist the whole time and couldn't see anything. Even MP was cloud covered when we arrived (though luckily it did burn off later that morning). When my roommate went a few years later in July, my jaw dropped when I saw his pictures.. just amazing views on the trail that I didn't know were there.