I'm also leaving for a Central / South America trip next year.
One question about the Inca Trail - one of the posters said you need to book it up months in advance. Is this correct? I'm not sure exactly when I'll arrive in Peru, don't want to miss the chance of seeing Macchu Pichu!
You must book the Inca Trail months in advance. However, there are tons of alternative routes, both in a group and independent, that don't require any advance reservations. I took a bus from Cuzco to Santa Rosa, walked to Santa Teresa (day one), walked to Aguas Calientes (day two), walked to Machu Picchu and back to Aguas Calientes (day three), and took the train back to Cuzco on day four - guide-free - on my own pace. Fantastic. Go for it!
I did a four month trip around South America a few years ago and did a mixture of independent backpacking and pre-arranged tours. It's very easy to book your transport ie overnight buses etc as you go along, and usually it's fine to turn up at a hostal on the day and check in for the night.
If you're looking to do the Inca Trail (short or long version) then I would definitely advice getting this booked up before you go. Permits need to be booked well in advance and you won't be able to organise this locally. The following link has a list of short tours that you can either get some inspiration from or pre-book before you go: -snip-
I took a Peru Lonely Planet with me, and this really helped!
I hope you both have an awesome time on the trip!
[ Edit: Sorry, no promos please. ]
I am a girl travelling alone for 6 months and as you can see I am still alive! I started in Brazil, but I plan to go then to North Argentina, Bolivia and Peru. Brazil is huge so you would need to take a few flights. I went to Manaus to see the Amazon rainforest, so I had to take a flight from Sao Paulo to Manaus and then from Manaus to Belem. Actually the flights were cheaper than buses or boat, as there was a promotion in TIM. I met people who told me that it is better to go to the jungle in Bolivia and much cheaper.
You can easily travel by bus in Brazil if you have some time. As you need to give a ticket to gather your backpack in the bus, I definitely recommend you not to take anything of value inside the bus, so that you can sleep without stress. But anyway I really feel safe in Brazilian buses. You don´t need to take a pass, but you need to be ready to take your time and not to have any accurate information in advance. It´s impossible to anticipate here in Brazil! But as there are many buses, you always succeed in getting to your destination even if you didn´t know how to do it a few hours earlier! It´s another rythm, you´ll get used to it quickly. The only thing is that few people speak english, so I strongly recommend you to know a bit of portuguese before travelling there if you are not booking a tour.
When do you plan to go there? I´ll be able to give you more information about Bolivia and Peru in a few months Have a nice trip!
You can follow my trip in http://www.travellerspoint.com/member_map.cfm#/tripid/379142.