I've stayed at Machu Picchu three times, each time at a different location and enjoyed the Hotel Libertador Cuzco the most, even it's expensive. I used the list of Machu Picchu hotels at http://www.destination360.com/peru/machu-picchu-hotels.php., which has good references of all the places to stay.
by studio360 on October 6, 2004
Hotel Libertador Cuzco
Plazoleta Santo Domingo No. 259 Machu Picchu, Peru