i'd never heard of huacachina in my life before, but i was assured by several other backpackers that i'd met in peru that it was an excellent place to stay and burn away a few days. i was definitely not disappointed.
the main hostel in town, the "casa de arena dos", offers mediocre accommodation at not-so-great prices, but is quite social and has the best backpacker party scene. since i was travelling with a friend and we wanted something more relaxed, for only a few dollars more per night we checked into the nearby and EXCELLENT "El Huacachinero". beautiful accommodations with clean rooms and modern decor, a beautiful swimming pool, and back gates that led out directly onto the sand dunes (with sandboards sitting around for the using), several exotic parrots in residence, good food and bar, and a great mix of young, mellow independent travellers, this was one of the best places i'd found to stay on my trip.
we ended up spending a week here, taking dune buggy rides (if you're staying at El Huacachinero, book through them to get an extra discount on the room rate), swimming, exploring the somewhat-run-down town of Huacachina (its like a MUCH more benign version of the salton sea in some ways.... definitely not running at full peak, but still a pleasant place to visit in the middle of the desert). my one piece of advice would be to make all onward travel arrangements BEFORE arriving here -- you'll want to avoid the nearby town of Ica (which has no travel agents, and a few ATMs for that critical cash fix) as much as possible, as it is a real bringdown after chilling out at Huacachina.
next stop, nazca lines!