Went there a couple of times, and loved it. Wouldn't recommend Cairo, but its worth going to for the experience, and seeing the pyramids and museums etc.
Drink bottled water only, and only salad that you know has been washed in clean water. BEWARE of ice-cubes! Don't expect much of the food - its pretty bad even in the hotels.
Expect "hassle" - lots of people trying to sell you stuff etc. Its not a place recommended for women on their own, well outside of the hotel complexes anyway.
Go diving if you can, its an excellent place to learn. Has some of the worlds best diving, and its also not too expensive. I think the diving is generally priced in US$, so the exchange rate should work in your favour. Snorkelling is also good if you haven't time for hte diving (it will take 4-5 days to learn).
From memory, most people / places would accept US$. I kept a $5 note in my wallet, and I needed it one night when a taxi man scammed us.
Beware of this scam, happened me one night when I'd had a few drinks. I think it is that an egyptian 10p (piatres) note and £10 note look very similar, if its not these, then its the 50p note and the £50 note. I gave taximan £50 note, and he switched them really quickly and claimed I'd only given him a 50p. I only realised it was a scam when another taximan tried the same trick another night. He backed down as soon as he realised I was on to him.
We did 2 trips:
1: Hurghada package holiday for 2 weeks. We did a dive course while we were there. We also left the hotel for a few days to do our own thing, we flew to Cairo (internal flight, about $100), spent a night there, sleeper train to Luxor (saved a nights accomodation), spent a couple of nights there and bus back to Hurghada. The biggest issue was the bus back to Hurghada, there are very few public services.
2: Sharm el Sheik for 1 week. We mainly went back for the diving, but we should have stayed for 10 days or 2 weeks. Sharm el Sheik was quite commercialised, with more associated "hassle". Hurghada was better. Luxor was very hot, but has really impressive temples.
The lonely planet guide is good.