Buses from Bagan leave at 7:30 in the morning arriving in Kalaw around 3pm approximately (K11,000). Same bus continues to Inle Lake (Nyaung Shwe town). Make sure to buy the ticket as soon as possible since it's always overcrowded and you don't want to get a spare seat on the aisle.
They also have buses to Bagan and Mandalay.
There are also slow train services to Thazi (Thazi-Kalaw is up the mountains, village stops, jungle right outside, recommended) (ordinary/upper class US$3/5), Heho(with airport) (US$2/3) and Shwenyaung (US$2/3).
Direct train all the way from Yangon is 3550K (lower class), a bit more for upper class. 26 hours journey including a ~5 hours stop in Thazi in the middle of the night, so passengers can rest a bit. Departure everyday at 11am from Yangon. Arrive in Thazi around 2am. Stop in Thazi. Start again at 7am, arrive in Kalaw at 1.15pm. The first section Yangon-Thazi is extremely bumpy and uncomfortable, the landscape isn't especially interresting. The second part from Thazy to Kalaw is much nicer, mountainous, slow and dramatic.
Bicycles can be hired from Niang Niang by the mosque. Try to get one with gears (that work!) so you can cycle to the sunset spots. They will also do 1day cycles to Inle but bargain hard. Luggage transport provided.
Myin Ma Thi village (temple + caves). Some kilometres away from Kalaw (about 30-40 minutes bicycle ride). Big cave to explore by foot. Free entrance but don't forget a little donation at the entrance/exit. Possible to rent a bicycle from the shop right next to the Myoma Monastery (in Kalaw). 2500K/ day (simple bike) or 10000K/day (mountain bike).
Kalaw has many trekking companies, most of the backpackers guesthouse will offer you a range of different treks, 1 day around Kalaw, 3 days 2 nights to Inle Lake, etc.
Before agreeing to a trek compare at least 3 different options and talk to other travelers. Normally they discount for a group of at least 4 people so it will be easy for you just join some travelers in Kalaw who want to do the same trek (most likely to Inle Lake).
Guest Houses are pretty cheap because the business remains with the trekking. Don't feel bad if you don't take the trek that your guest-house is offering, they will certainly have clients from other parts too.
The typically price of the trekking tour is 20$ person per day including meals in trekking trip, accommondation in trekking trip.The big luggage will be transport to Inle.The cost is 4$ for one luggage.
Ko Min is one of the excellent trekking guide in Kalaw.He can speak good english.He is knowledgeable and good service.You can contact the email address is firstname.lastname@example.org, email@example.com
Sam's Family trekking company has a good reputation (I personally took it after comparing 4 different places), good English guide, good service and respectful although there have been reports by former guides employed by them that are not favorable.
Mr. Jack (SoePaing, firstname.lastname@example.org) who does trekking for 9 years now, speaks good English and sometimes brings photo's and medicine for the local villagers.
Smile is located along the the highway road across from the KBZ bank. Smile is the cheapest place to have a drink in Kalaw. The owners, a lovely local couple, spend their time waving and smiling at potential customers as they walk by trying to drum up a bit of business. Although very small and furnished with plastic chairs, Smile has an unusual charm. It's a great place to people watch and strike up conversations with some friendly locals. They also have a limited food menu. All beer costs 1500 Kyat.
There are many budget options as well as proper hotels in Kalaw. Most of the budget accomodations are around USD 10-20 /pax/night. The cheapest one seems to be US$8/night for a dorm. About $25/night for a double bed with 2 people should be still available in a decent hotel as of Dec 2014.
Pine Land Inn. Start at USD 5 for a single room. They have a lot of choice including single/double/multi room with or w/o bathroom. Breakfast available but not included. Free wifi, good connection in all the building. Situed on the main street, north of the town (10 minutes walk from the railway station, 1 minute from the main market), straight next to the big "Winner Hotel" building.
Golden Kalaw Inn. Incredibly helpful and professional owner. Very clean hotel, nice breakfast. Please note there may not be heat or a/c in rooms and it can be quite cold in the winter, although there ar eplenty of blankets. As of Dec 2014, USD 9 for Dorm, USD 25 for double room. A great value. Tel: +95-081-50311. Email: email@example.com. Friendly staff