Sure, that's a good amount of time. I don't know your price level for hotels, do you want cheaper or not? I've stayed in 2 I like very much, but they are on the upper end (but not most expensive in town). My priorities are very good location near the central square so easy to walk everywhere.

one was the Pod Roza, lovely old hotel a few blocks north of the square with period furnishings and huge rooms. I had a room looking into some interior space as I recall, which wasn't gloomy as there was natural light and it was very quiet (which is why I wanted that as the street is a very busy one). http://www.hotelpodroza.com/

The other room was the Grodek which is a few blocks away, down a small street. But not too far from the main square to be inconvenient (farther than Pod Roza, though). http://www.donimirski.com/
I loved that hotel, it was very comfortable and had a great buffet breakfast. I liked it a little better just because I think the bed was more comfortable.

3.5 days would be perhaps a tad more than enough - the city center is compact and an easy day is enough IMO and IME. But if doing the compelling day trips to Wieliczka Salt Mines, several miles south of Krakow ("Krak-hoff" kind of said) and to Auschwitz and Birkenau concentration camps about 50 miles or so east of Krakow then that would make a difference. Not sure there are any other worthwhile day trips for the average tourist unless Nova Huta (sp?) for the person who wants to see what a communist-styled brand new town looks like - DRAB drab drab - a satellite town a few miles out of Krakow - it is said about Nova Huta 'Rome was not built in a day but Nova Huta was!'

There is decent public transportation to Auschwitz/Birkenau (two separate camps about two miles apart - do not miss either one - Auschwitz basically a work camp but at Birkenau you see the rail siding where arrivees were selected as fit for work or dispatched into the gas chambers who ruins are clearly visible. Concentration camp visits are not everyone's cup of tea however so if not that 3.5 days may be too much IMO as some others places may be better to spend a day or so.

Are you traveling by car or train - trains are a good way to get around Germany and to Krakow and Auschwitz and Wieliczka too. anyways check out these fantastic sites IMO for lots on German and Polish trains - www.seat61.com; www.budgeteuropetravel.com and www.ricksteves.com. Check out www.bahn.de - the official site of the German Federal Railways for trains schedules for all of Europe and fares for German trains - there are some dandy online discount fares which though are sold in limited numbers so should be booked far in advance to guarantee. But savings can be immense. There is also a German Railpass that if you want full flexibility to hop any train anytime could be a great deal in light of how expensive fully flexible fares are (online discounted fares are train specific and non-changeable nor refundable I believe)

Just a few trips at full fare can make the railpass a great deal and again you just show up at the station and hop any train. There is also a Germany-Poland Railpass I believe. And my decades of riding German trains makes me exhort the common tourist to definitely go first class as it is a much much more relaxed experience - seats are lot bigger - lots of empty seats as opposed to often packed IME 2nd class cars. And the railpass stacks up very well against regular first class fares.

I'm a Krakow fan so I would opt for more time there but you can see a lot in 3.5 days. My favorite things that I did there were (not in order of favorites):

1. salt mine
2. University tour
3. Krakow under the occupation museum
4. Franciscan church
5. Vespers at the Dominican church
6. Kazimierz and Podgorze

Wawel can bog you down as the tickets are timed and they sell out quickly so you need to go early in the morning to buy tickets and perhaps return later in the day. You can also reserve tickets for future days.

I stayed at the Trecius Hotel; inexpensive and not fancy but wonderful staff, comfortable bed, decent breakfast. It's a short block from the main square. It does tend to be noisy at night which didn't bother me.

Nowa Huta is not a day trip from Krakow, it is part of the city. It's also very interesting and has the fantastic Arka Pana, whose story is mesmerizing. Nowa Huta is a part of Polish history and Arka Pana is part of the history of Polish resistance to the USSR.

And it's not new, it was developed during Stalin's reign.

To the OP: I know a fine hotel but it may not be optimal for you because it has no elevator. The hotel is Hotel Wentzl right in Rynek Glowny with a view from every room of the square.

You should also fly. Berlin to Krakow is at MINIMUM an 8h45 trip by train and the only offering without a change is over 10 hours. Munich to Krakow is nearly 19 hours.

we had 3 days in Krakow and felt it was about the right amount of time.

we saw a few museums, the salt mines [not the concentration camp] the Ghetto and jewish quarter, and Nova Huta including Arka Pana [though that did take some finding]. we also went to a couple of terrific concerts - one at the concert hall, and another in a church.

do go - you'll really enjoy it.

Here is our 3 1/2 days in Krakow with photos.

http://www.travelswithmaitaitom.com/Tom_%26_Tracy_Home/Central_Europe_Venice_2008/Entries/2010/8/10_Chapter_Four__Captivating_Krak%C3%B3w.html

http://www.travelswithmaitaitom.com/Tom_%26_Tracy_Home/Central_Europe_Venice_2008/Entries/2010/8/10_Chapter_Five__Krak%C3%B3w_and_Vienna.html

We stayed in an apartment near the castle. We were with friends so it was much cheaper than a hotel and very convenient.We flew Air Berlin from Krakow to Berlin,great service and only an hour flight. I think it cost 60 Euros one way.We were in Krakow for 3 days and it was enough time.

<And it's not new, it was developed during Stalin's reign.> BigRuss - Staling FYI was a communist and when I wrote:

<a communist-styled brand new town looks like>

I did not mean it was brand new but was built all at once as a brand new town - poor word choice perhaps. When built it was a bit out of town.

I was just there in Septmeber and in addition to the great ideas above I suggest a visit to the Schindler Museum. If you haven't seen the movie Shindler's List please do so before your trip, it's a wonderful movie. The musuem is in the place the factory used to be. There isn't much left of the original factory but you can visit Schindler's office which was worth the price of admission for me. It's a huge musuem so please allow at least a couple of hours.

http://en.wikipedia.org/wiki/Nowa_Huta

Nowa Huta has an interesting history as BigRuss notes - and the Catholic Church that BigRuss talks about was built only after constant calls for it from catholics - Pope Paul II consecrated it before he was Pope - the change in Poland from communist to capitalism is shown in the main square, where, Wiki says, was once dominated by a huge statue of Lenin (after being pulled down now in Sweden!) and the square re-named for Ronald ("mr Gorbachev Tear Down that Wall!) Reagan!