Tips on travelling by train through Sri Lanka?

serena

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I'm planning a 2-week trip with my husband to Sri Lanka in March and wanted any advice anyone could offer on travelling through the country. We're flying into Colombo, spending a day or two there, then planning on taking a train south, working our way down to Tangalle. I've heard Tangalle has the best beaches, is this true? Then, we're going to travel north by train to Anuradhapura and several other ancient cities.
What is the best transport from Colombo Airport to our hotel? Is it possible to pre-book a driver, as I'm not looking forward to haggling for a taxi at the airport, because we've done that before and it always ends badly.
What are the best places to visit, how much can we expect to spend on food and hotels (mid-range), are trains easy to figure out and inexpensive, are cash machines easy to find, should we take travellers cheques or stick to debit/ATM cards, etc. Also, is it cheap to hire a driver or get a taxi, like it is in India? We're planning on a backpacking holiday and won't really have a plan of where we're going, so is it easy to just find a place in our guide book, show up and expect to find a hotel? I'm a foodie, so will I be able to get really good food there? Is alcohol available there in shops, or only at nicer restaurants and hotels (my husband thinks a holiday must have beer!). What items should we definitely take (bug spray, diarrhoea tablets, etc). We're trying to travel inexpensively, but aren't on too tight of a budget.

Any other advice on the country would be greatly appreciated. Thank you!
 
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