I went to Peru last year with my sister. We spent two weeks.

First:
Iquitos/Amazon
We flew into Lima and spent the night in the airport, taking the 4 am flight to the rain forest. From there we took a boat to the resort. I believe it was called Chieba Tops (spelling). I believe the company is explorama. It was very affordable. It was right off the Amazon and the closest resort to Iquitos (about an hour boat time). The rooms had a/c and there was a pool. From there you can take day trips to their other resorts and do a canopy tour, go pirahana fishing, visit a local village, and several other things. The other resorts are more like camping. You sleep in mosquito nets and even though my sister and I are tough, it didn't look like fun for a week.

After spending a few days in the rain forest, which was AMAZING, especially seeing the sunrise on the Amazon. We had one night in Iquitos. Our first hotel looked like it was used as pimp house, so we upgraded to one of the nicest hotels in town. It was still only $70. Overall, Iquitos didn't look to be the best of cities. I think if you want the experience, one night should suffice.

Next:
Cuzco and the Inca Trail

After spending three days in the rain forest, it was time to head to the mountains. Our flight from Iquitos to Lima got diverted to the Chiclayo on the coast due to fog. Chiclayo looked like what I imagine Baghdad looks like in a dust storm. Just lots of dust. Landing in Cuzco and taking off is incredible at 10,000 feet surrounded by mountains. You'll need a day to adjust to the altitude. My sister didn't feel good the first night, but was fine the next day. Cuzco is a must if you go to Peru. We wandered the city and were lucky enough to get a tour from the nice lady who helped up set up our Inca trail excursion. We also took a tour w/ her through the Sacred Valley. Our hotel was one of the nicest ones in town. It's a four or five star chain, but I forget what it's called.

You'll need a tour guide or something for the sacred valley. It's pretty cheap as well.

After a few days of shopping and hiking around Cuzco and the Sacred Valley, we set out on the Inca Trail. Our trek was four days, and I think I cost around $400 a person. We were fortunate enough to procure two spots on the trail, and more lucky that our group only consisted of my sister and me, and two college girls from the UK who were traveling the world. If you can, I highly recommend taking the trek. The scenery is breath-taking and the experience seemed so much more rewarding than taking the train. You also get to see more ruins and summit a 14,000 foot pass. It'll get you into shape if you aren't already.

Machu Picchu
Spectacular. Aguascalientes, the surrounding city is neat because it looks as if the sides of the valley are going to cave in and destroy the city at any moment. We stayed at the Inka Terra resort. Our hotel had got all screwed up and we had little choice but to upgrade to the $400 a night resort. It was nice, especially after living in tents, but not worth it. There is a hotel at Machu Picchu, but it's so incredibly expensive that it doesn't seem worth it. For the price of that hotel you could hike the inca trail. After nearly two days in aquascalientes, we took the train back to cuzco, where we spent another day or two.

Finally,
Arequipa
We flew from Cuzco to Arequipa, after deciding Arequipa would be our final stop in Peru. Arequipa is known as the "White City" and has a much more Latin America meets far Western Europe feel compared to Cuzco. There is great two day hiking from the city, but we only felt like a day hike. It turned out to be a horrible hike and we had no idea what we had gotten ourselves into (literally a hike across the desert with no water and lots of bugs at 8,000 feet). The city was fun to explore, but I liked Cuzco better. We flew back through Lima.

We never left the airport in Lima, but I'd like to go back some day. Peru was amazing. We went from being in the middle of the rain forest to seeing snow capped mountains to seeing the beach (Lima) all in one trip. Also, it is possible to do most of the trip w/o an organized tour. My sister and I saw those tours and were glad we had the freedom. Day tours seemed to work better if you're more independent. Obviously there are times you want a guide, but it's also fun to be able to explore on your own. If you have any more specific questions feel free to PM me.