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We did it in late 2006...
The bus system is really good in Chile, especially with Semi-Cama seats, where you can sleep quite well! It was pretty cheap, I cannot remember the prices, but much cheaper than a flight for sure!
We did Santiago to San Pedro de Atacama. I think it was 12 hours bus ride though, but it was really nice to be in the desert. We spend a few days there, it is really beautiful.
We then went from San Pedro to Arequipa in Peru... We spent a few days there, then Puno (Lake Titicaca) and Cuzco to do the Inca Trail!
Well you need some time, but Peru is definitively worth it!
If you just want to go to Machu Pichu, then I recommend you to do the Inca Trail for sure, that was probably the best thing I have ever done. I met cool people, and the views are amazing!
I can try to find out prices...
Cheers GuyP
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