You'll feel like one of the Magnificent Seven in Tupiza -- it's surrounded by stark canyons sheltering dry river beds. The altitude is three thousand meters, but the area bakes during the day and temperatures plunge to single-figure Celsius at night. Tupiza is really for those who love the outdoors; there are great hiking and horse-riding opportunities in the area for those staying in Tupiza hostels. These are really worth taking, as the scenery is spectacular. If your budget is limited there are several easy hikes you can take without a guide to nearby canyons with weird rock formations and complete solitude. This place is large scale and it's breathtaking to see.
For a town of more than twenty thousand people, it has more than enough accommodations including hotels, guesthouses, and hostels in Tupiza ranging from the most basic to those with air con and swimming pools. Many offer breakfast included, but this is invariably a bread roll, some jam, and a cup of coffee. Dorms rooms, as is usual in small Bolivian towns, are in short supply, but they are there if you look hard enough. Rooms can be found so cheaply that a dorm wouldn't really offer a significant saving.
Tupiza is an eight-hour bus ride from Potosi and three hours to the Bolivia-Argentina border. Other than coming to see the mars-like scenery, Tupiza is the place to book a tour through southern Bolivia finishing at the Salaar de Ulyuni. Three- and four-day tours can be booked with several reliable operators in town, many of them attached to a Tupiza hostel. Prices are fixed but decrease with the number of people going on the tour, so it's wise to decide on an operator and let them know a few days in advance the date you want to leave to maximise your chances of getting a full tour. Tours are in Land Rover-type jeeps and four people is optimum for comfort; some operators may try to squeeze as many as six into the same space. It is a long time driving on the tour, so take this into consideration.