The major sites in Cusco are:
Saqsayhuaman: Pronounced almost like "sexy woman" this is an imposing megalithic structure only 2 km outside of town. It's purpose is unknown. Perhaps it was a military structure or fortress. Maybe it was a temple. Pope John Paul II said mass here in native Quechua to hundreds of thousands of Peruvians.
The Cathedral: Built by the Spanish upon an Inca Palace, it is a lavish Spanish Cathedral in the heart of the city. The controversial and famous "Last Supper" features a guinea pig as the central dish.
Q'Orikancha: The most import of all imperial structures. It was built as a rock-solid fortress started by Inca Pachacutec, it was partially demolished and re-constructed by the Spanish.
Central Market: I have never seen a market in the world like this one. Local foods, souvenirs, and just about anything can be found here.
Where to Stay:
Casa Andina chain has some outstanding hotels. I like the Terra Andina for its comfort, quiet but good location, and their hospitality.
Where to Eat:
Have dinner at Astrid & Gaston's Chi Cha. The Peruivan fusion is amongst the best in all Peru and the price is right. The Monasterio for lunch is an indulgence in a formal, Spanish former monastery among beautiful architecture, flowers, and fountains.