Kraków is by far the most interesting city in Poland for tourists, and it’s also easy to reach for most people. It may not be quite as beautiful as Prague, but it’s usually far less crowded and it’s quite a bit cheaper in most respects. Kraków is truly one of Europe’s great travel bargains, though that might not be true years from now.
Hotels in Kraków are quite cheap by European standards, and good deals are often available in the 3- and 4-star range, so don’t automatically look for a 1-star hotel or a hostel. There are cheaper hotels that are well away from the city center, but standards at those can be low, and the area is often inconvenient.
The main attractions plus general transportation in Kraków are quite reasonable, so even backpackers on limited budgets will be able to see the museums and palaces from the inside instead of just the outside.
Food is also quite cheap by European standards, as long as you like the hearty local food. If you require something else it’s not quite as cheap, but still prices are reasonable. Drinks are also quite inexpensive by European standards.