Back to the OP's original question, we stayed at the Sol Y luna in the sacred Valley. Very nice. The Machu Picchu Pueblo was also nice - EXCEPT OUR ROOM. I beleive if you get a room WITHOUT the musty smell, you will have a better experience. Other than that, the grounds were fun and the food was great. Check out the bear/s.

With respect to altitude sickness, I definitely got hit on our first day. We didn't take the advice of resting on our first day. After an early morning arrival, we headed straight to Pisac and climbed around the ruins. That afternoon I had an incredible headache. Local Saroche pills and coca tea were the eventual cure. By the next day we were all over Machu Picchu with no problem. On the third morning I hiked to the top of Huana Picchu (a must do) with no altitude sickness problems.

If you haven't made final plans, definitely consider Bolivia including Lake Titicaca and Tiwanaku. You can fly from Cusco to La Paz and be brought straight to a fascinating hotel on the shores of Lake Titicaca. A bonus is the flight goes over the entire length of Lake Titicaca! The tour operator that we went through owns that hotel, another one on Sun Island and the hydrofoil boats. They run a first class operation.
here's the link: http://www.titicaca.com/flash/ingles/bolivia-in.htm

I wrote in greater detail on other threads about Machu Picchu and Lake Titcaca, if you do a search.