Kalaw is a hill station in Myanmar (Burma), at 1320 metres above sea level.
Buses from Bagan leave at 4am in the morning arriving in Kalaw around 15am 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).
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.
For 3000 kiats they will send your luggage to the guest-house in Inle Lake you tell them.
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. Another option is Jack (SoePaing, email@example.com) who does trekking for 9 years now, speaks good English and sometimes brings photo's and medicine for the local villagers.
From December 2011 I was told by the guide that Kalaw's area is malaria-free so you shouldn't worry. Another possibility is to do your own trekking by yourself (try to be accompanied by other people at least). The paths are not too though to carry your light luggage, but if it's heavy you can arrange with the trekking companies in Kalaw to send it to Inle Lake guesthouse by paying a small fee (3000 kiats at Dec 2011). If you can have some GPS, you can download/follow the trekking maps on www.openstreetmap.org uploaded by other trekkers.
There is a big central market in the center of the town.