This is what I am thinking of doing. Any suggestions on adding or deleting a part? Should I add a night in Nazca or not? Should we fly from Cusco to Lima ( that will cut a night in Cusco) or use the bus route? I have picked up the sightseeing from tour operators websites (but not sure if we should use them for everything or not - any suggestions. Let me know your comments.
Especially for Trav_Eller - let me know if it all seems reasonable. I am thinking its too hectic but am not sure since the travel in buses/trains may be enough time to recover. What do you think?

This is what I am planning
May 3rd Arrive Lima (Night in Lima) (late arrival)
May 4th Lima (day and Night) - see 1) City Tour & Gold Museum;
May 5th Leave Lima for Nazca (by bus); see Nazca lines and take night bus to Arequipa (night in bus)
May 6th Arequipa (day and Night) - see 1) Countryside & Sabandia Mill (half day tour)
May 7th Arequipa (day and Night) - see 2) City Tour & St. Catalina's Monastery
May 8th Leave Arequipa using tour bus for Colca Canyon - night in Chivay (per tour operator)
May 9th Leave Chivay/Arequipa for Puno (Night in Puno)
May 10th Puno - see 1) Amantani Island (Night in Puno)
May 11th Leave Puno for Cusco By Inka Express bus or by Andean Express Train (night in Cusco)
May 12th Cusco - see 1) The Magic City & Nearby Ruins (night in Cusco)
May 13th Cusco - 2) Sacred Valley of the Incas (night in Cusco)
May 14th Cusco to Machu Pichu (night in Machu Pichu)
May 15th Machu Pichu (Night in Machu Pichu)
May 16th Machu Pichu to Cusco (night in Cusco)
May 17th Cusco to Lima (Night in Lima)
May 18th Leave Lima

Looks just about right to me. I'd opt to spend more time in Cusco than Nazca. It's a busy itinerary (but you can rest when you're home) and you might have to refine it a little en route. There are always suprises.
Have fun!

"May 14th Cusco to Machu Pichu (night in Machu Pichu)
May 15th Machu Pichu (Night in Machu Pichu)
May 16th Machu Pichu to Cusco (night in Cusco)"

This is going to give you about 54 hours at Machu Picchu. That seems overkill to me. I'd cut it back to one night.

Cusco to Lima is about 20 hours on the bus. Fly if you can.

To see it all and adjust to altitude best follow this route

adventures.worldnomads.com/destination/168/itinerary/23.aspx

Did this a little over a year ago and had a blast...

Brabant Tours Hostal in Nasca was great

flew the Lines with them for $55

www.casa-andina.com hotels are great everywhere

or top www.hostelbookers.com hostels if budget is tight

Have fun,

I agree too much time in MP unless you are doing an Inca Trail hike. Spend some more time in the Sacred Valley instead.

You can never have too much time in MP It depends on what your interest in MP is, really. If you're an avid photographer and want to catch those all important fleeting golden hours (dawn and late afternoon - you can't stay at MP till dusk) when landscape photography is usually at its best then I can totally see allotting extra days at MP to do that. If the weather is bad one day for instance then at least you have another day to try again. Also, if you want to climb both MP Mountain and Huana Picchu then you definitely will want to do that on two different days.

Taking the overnight bus out of Nasca is just fine. It isn't a very touristy town. Once you've seen the Lines, and the graveyard you've seen a tourists highlights.

It seems my itinerary is wrong - I think, I need to spend a night in Nazca in order to see the Nazca lines - the bus arrives around 1 in the afternoon (its a 6 hrs drive from Lima) not leaving much time for a guaranteed flight that same day. Am I wrong? I haven't got a definite answer, yet on my other post. Nazca being our first spot after Lima - I am stuck - I need to revise the whole itinerary I believe. I had earlier taken the extra night in Machu Pichu out after reading the comments and realizing that the trip to Machu Pichu from Cusco is rather short (2 Hrs or so). Thanks for your help

The trip to MP from Ollantaytambo is rather short.

The trip from Cusco to MP is more like 4 hours each way.

You might want to visit the website if you don't have access to a guidebook for Peru

http://www.andeantravelweb.com/