San Pedro de Atacama is a small town (about 5,000) in northern Chile, just a few miles from both Bolivia and Argentina. It's in the Altiplano, a high plain in the Andes mountains, at approximately 2,400 meters. It's the largest high plateau in the world next to that in Tibet. The Atacama is also the driest desert in the world.
Most of the town's inhabitants are dedicated to tourism. Although there isn't much to see in the town itself (an old church and a nice museum), there are many tour agencies offering excursions to surrounding areas. I took a couple tours—one for a full day in a couple small 4x4s with a small group high up into the Andes and another for a half day with a large tour group to a few areas closer to the town.
The full day tour took us very close to the Argentine border and up over 4,000 meters. We saw some salt flats and interesting rock formations not unlike what you'd see in the American Southwest. We stopped at a beautiful green lake which was partially frozen. During several of the stops we made, it was very windy and the temperatures were bitter cold. At the lake, my hands went numb after taking pictures for about 10 minutes. The altitude along with the wind make it very chilly. This tour was a bit more expensive because it was with a smaller group. It was about $85 (38,000 pesos). If you're a photographer, though, it's worth it. The stops are frequent and you have plenty of time to shoot.
The other tour, which was with a larger group in a small bus cost only 5,000 pesos, or about $11. The bus broke down a few times, we had to walk a ways, and we ended up arriving at our final stop for the sunset just minutes before it went down. This tour went to Valle de la Muerte (Death Valley) and Valle de la Luna (Moon Valley). As we were en route to Valle de la Muerte, a passenger kept comparing and contrasting this "Death Valley" with the Death Valley in The States.
Tourist: How hot does it get here?
Guide: 45º C.
Tourist: Death Valley, Nevada gets up to 47º. What's the lowest point here? Does it go down to sea level?
Jay: No, you moron. We're at a few thousand meters in the freaking Andes Mountains!!! (I didn't really say that, but I thought it)
Guide: No. We're at almost 3,000 meters.
Tourist: Well Death Valley, Nevada goes down to 300 meters below sea level.
I can't tell you how hard it was to keep my mouth shut. First of all, Death Valley is in California, not Nevada. It's all the more amazing this bozo didn't know that, as he's from Las Vegas! Second, Death Valley National Park has a low point of 282 feet below sea level. Other areas of the Park extend to over 11,000 feet. Last, the temperature record for Death Valley is almost 57º C. That's 134º F. Quite a bit more than 47º!
Anyhoo, it's uncanny how similar Valle de la Muerte is to Death Valley National Park 
in the United States. From the rocks to the colors to the sand dunes, they're very similar. If you want to visit this kind of landscape and you're in The States, just go to California. If you're in South America, San Pedro de Atacama is worth a visit.
There are other attractions such as geysers and salt flats with flamingos, so leave at least a few days for tours. You can also rent bicycles and pedal your way around if you want to save a few bucks, but there will be a lot you'll miss on bike. The bike is good only for some things that are close to the town.
Another thing I thought was amazing: 70% of the tourists who visit San Pedro de Atacama are Europeans. Of those, 40% are French!
The hostel I stayed in was Hostel Sonchek. It's a nice, peaceful place to relax. The facilities are good and the prices are low. Although there's no Internet, there's an Internet cafe next door (with WiFi). They don't appear to have a Web site, so you'll just have to Google them.
Another interesting tidbit about the town: they lose power regularly. About 30 Km away are gas generators. I don't know what the issue is, but power went out about 4 times while I was there over a 3-day period.
As far as weather goes, while I was in San Pedro de Atacama, in the sun I would sweat—and would have burned if I had stayed in the sun for a few hours without sun block—and in the shade I would get cold. So, you should have a variety of clothing, both for hot and for cold.
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