If you don't have your own private transportation (e.g. car, bicycle), there are basically three ways to get around in Cusco: taxi; combi (minibus); or on foot (in order from most to least expensive). Being the parsimonious and aware-of-the-long-road-ahead traveller that I am, I prefer to take the final option whenever possble. I like the concept and the good value of the second option as well. However, local economics, local culture, and occasional lack of time mean that I've taken taxis in Cusco far more often than I would normally.
Combis in Cusco are really cheap: s/0.60 flat rate for each ride. But they're also really crowded, and they have strange and unpredictable routes. Taxis are hardly much more — s/2 flat rate, or s/3 late at night — and they're easily the quickest and the most convenient way to get around. Walking, of course (along with the thin, somewhat polluted Cusco air that comes with it), is free.
I hate getting taxis. My entire life, I've had the philosophy ingrained into me that taxis are the overpriced last resort of urban transportation. My instinct is to reject taxis with every fibre of who I am. But here in Cusco, taxis are so cheap, that the culture is for anyone with any money at all to get them all the time.
Taxis really are everywhere in Cusco. And they have this aggravating habit of looking for people walking on the side of the road, and driving past and honking at them, to indicate that they're vacant and available. That really gets on my nerves. I mean, if I need a taxi, I'll hail one, OK? I can see for myself whether or not a taxi is empty, when it drives past. But that's just another aspect of the different culture around here.
I'm managing to get around by walking most of the time. Walking is safe almost everywhere (that I frequent), and Cusco isn't a particularly spread-out city. When I'm in more of a hurry, and I'm on a main road, I'll jump in a combi as well. But all too often, time and distance are against me, and taxi is the way that I go. And for s/2, who can resist?