Absolutely go.
I traveled to
Peru and
Bolivia this spring and it was fantastic. I think I flew down with $2500 in my account, spent three months there, and flew back with about $500 leftover. And mind you, I did everything I wanted, and ate generally well.
Hostels in the tourist cities of Peru like Cusco, Arequipa and Lima range in price, but I'd say around $10-15 a night is average if you want a nice place with all the amenities of home. Cheaper ones can obviously be found if you put in the effort and are adventurous.
Buses are real easy to go from city to city on. Most places in Peru have central terminals where you can roll up and reserve a seat for the next day, or even shorter notice depending on the company and length of the trip. The cost is generally quite cheap, working out to about $1usd/hr. Some of the companies have enroute movies, hot food, blankets and everything else you'd associate with a discount airline.
For daytime trips, take the cheaper buses - they're more exciting. Pay a little more overnight trips, remember you're saving on hostel costs.
Food varies, but it's cheap, and if you like chicken and rice you're in the right place.
Bolivia is comparable to Peru with regard to everything I've said here... except it's cheaper, and way more fun. The people are cooler too.
Go. Go. Go!!!
I had literally zero trouble during the three months I spent there. I met countless others travelling alone and while there were some negative stories, you have to expect that things can get hairy sometimes. Just talk to people you meet, get recommendations, and be open to inconvenience.
Okay, if you have any specific questions with regard to Peru or Bolivia I will try and answer as best I can.