IMO the noon-trains are the best option.
The hard-sleeper train to Dali 11.57 a.m., is in fact a soft-sleeper, equipped with a bar/ktv, a restaurant and cafe.
The beds are very comfortable. They even have a VIP compartment on the train, 460RMB for a 3 bed compartment.
The standard fare is 105 RMB for lower bed, if you purchase online or 97.5 for the upper bed. There are only 4 beds per compartment.
If you go to a ticket seller, there is a 5 RMB surcharge.
The train back from Xiaguan leaves a little bit earlier, at 11.07 a.m.
Both ways, there is only one stop and the train ride takes a little bit over 5 hours.
From arrival in Dali/Xiaguan, you can take the tourist bus either way heading to the Three Pagodas and get off at, Dali Old Town West Gate/ Cangshan men.
Or, the bus no. 8 to Erhaimen, which is close to the Old Town East Gate. And even if you miss your stop, the bus terminal is at the hospital at the Old Town North Gate.
Both are 2 Yuan.
So, in terms of buses from the train station, find out where your guesthouse is situated, for your bus choices.
I don't mind the Dali-Kunming buses myself but I find them uncomfortable and expensive, the cheapest ride from the bus-station [West coach station] is 125RMB, for the small busses, and 145 RMB for the travel coaches.
The train is much more convenient and comfortable. Take some food, or snacks on the train, maybe even a nice bottle of wine, listening to your I-pod, while enjoying the scenery, with great food and beverages.
If you take the subway to Kunming station, get off the metro, at the South Ring Road station, the actual train station stop is not open for public.
