Just returned from visiting relatives in Chile and can highly recommend the wine train in Santa Cruz although I believe during the "off season" it only operates on weekends (not sure of that)
Regarding hotels in the Colchagua Valley, although the Santa Cruz Plaza hotel is certainly very nice I would recommend the Vina La Playa Hotel which is located in the midst of vineyards and a winery. Beautiful setting and very good food and lots of wine tasting at mealtimes. It is about 40 minutes from Santa Cruz and on the way to the town you can stop at Casa Lapostole winery.