Cafayate is a desert area, where you can only plant anything if there is irrigation. The best vineyards and wineries of Argentina are here, including Michel Torino (recently bought by a French winery) and Vasija Secreta. The wine production is specially know for its torrontés white wines. A visit to the wineries is a must.
There are all sorts of hotels here, that range from $5 a night up to really expensive ones. Since I have never stayed at Cafayate (I have always visited it from Salta) I am reluctant to recommend any, but here is a list of some of the hotels where you can stay:
5 stars: Patios de Cafayate, Intersection of Highway 40 and highway 68, phone (54-3868)42-2211
4 stars: La Casa de la Bodega, and Viñas de Cafayate.
3 stars: Asturias and Los Sauces
2 stars: Gran Real and Automovil Club Argentino
1 star: Briones, Colonial, Confort, Emperador and Tinkunaku.
The road from Cafayate to Salta (2 and a half hours on the bus) will impress you by the arid landscape (a sort of Arizona), and the colours in the mountainside. I am posting some photos to give you an idea.
The places you should not miss, apart from a visit to the vineyards and wineries, is the Anfiteatro (Amphitheater) where if you are lucky you will see and old man playing folklore music of Northern Argentina, that has a very special sound due to the echo in the mountainside. Also the Garganta del Diablo (Devil's throat), Los Castillos (The Castles) and La Yesera.
Cafayate is connected by the Aconquija bus line with both Salta (2 and a half hours), Tafi del Valle (about 2 hours) and Tucuman (some 4 hours of travel). These buses run some 4 to 8 times in the day, leaving Tucuman at 6.00* 7.00* 10.00* 14.00* (2pm) 16.00 (4pm) 18.00 (6pm) 19.00 (7pm) and 20.00 (8pm). The last four buses only run on Saturdays. The buses marked with an * run every day.
Only the 6am, 2pm, and 7pm buses go as far as Cafayate. There are buses from Cafayate to Salta about every two hours (a two hour and a half trip). There is a stop at Cabra Corral, where there is a nice dam and lake where dorado fishing is possible.
So the four places you should visit here are Los Castillos, La Yesera, El Anfiteatro, and Garganta del Diablo. You can visit all four on a taxi for some 20 to 25 dollars, and for a few dollars more you can also stop at La Rosa (Michel Torino winery) to take other beautiful photos, and taste their delicious wines.
I know you will enjoy far more the trips from Salta to Cachi, to Humahuaca and the Train to the Clouds, but this is a completely different scenery, and you will not have the complete picture of Salta if you do not visit this area.