Based on a several day trip to Krakow in 2006.
Krakow is a really beautiful city. An amazingly intact and unspoilt old town (Stare Miasto) surrounded by a park-like green belt (Planty). It is still relatively untouristy (or at least less so than Prague) and people are extremely upbeat and friendly. Best to visit in the warmer months of the year when people are actually hanging out on the beautiful main square (Rynek Glowny) and strolling through the old town and up to castle (Wawel). The Easter weekend may not be an ideal time to visit, as the country is extremely catholic, meaning that everything is closed and the city will be rather quiet (apart from the churches...). A fun time to visit might be the Juvenalia student festival in May (students take over the city...traditionally, the mayor even hands over the keys of the city to them...lot's of parties and cultural events). Regarding food and accomodation, there is lots available and it's still very cheap. If you would like to eat with the locals (rather than with other tourists), try one of the bar mleczny ("milk bar", traditional lunch restaurants for workers), e.g. Pani Stasia at ul. Mikolajska 18 and U Babci Maliny at ul. Slawkowska 17. At night, there are many bars around the main square (e.g. the student club Pod Jaszczurami is a good place for a beer) and in the streets of the old town. For less touristy nightlife, try the Jewish district (Kazimierz) which is walking distance from the old town. There are some more alternative and student bars around Plac Nowy square. Szeroka square is surrounded by Jewish-style restaurants, and while most of them are crowded by tourists, you can still enjoy the Jewish cuisine and the Klezmer music (if you are interested in a Klezmer concert outside a restaurant, check out the Jewish cultural center). A famous Klezmer band from Krakow is Kroke.