I was intrigued by the mention of the elegant city of Arequipa in peru when reading Pauline Frommer's Top Ten Budget Destinations of Summer 2008 I decided to find out a bit more.

© Greenwich Photography
Arequipa, founded in 1540, is known as the "White City" as it was constructed using the local white volcanic rock. It is surrounded by three volcanoes. Mount Chachni, Mount Misti and Mount Pichu Pichu. The city centre has many Spanish colonial style buildings and is a UNESCO World Cultural Heritage Site. Close to the city lie the Toro Muerto Rock Paintings, the Colca Valley and Canyon.
Sounds well worth visiting, unfortunately Peru isn't a budget destination from the UK due to the cost of flight.