Polonnaruwa is a city in the North Central Province of Sri Lanka. The second most ancient of Sri Lanka's kingdoms, Polonnaruwa was first declared the capital city by King Vijayabahu I in the 11th century AD and maintained its status until the 13th century. In 1982 the ancient city of Polonnaruwa was inscribed on the UNESCO World Heritage List. The history of Polonnaruwa is available at this link 
What's nice about Polonnaruwa is that the ruins are in one compact area so you can visit them quite easily. Just one three wheeler ride from where you're staying to the entrance and you can walk about them all day long.
Polonnaruwa is 216 km or 134 miles from Colombo.
To travel there, you've got several options. They are, in order of preference, car, train and bus.
Car is the easiest. Any taxi service (+94 11 2556 556 or +94 11 2818 818 are two numbers of cab companies you can call) will charge you around LKR 30 per km (approx LKR 13,000 roundtrip) (as of mid 2007). Make sure you ask for a Nissan Sunny or Toyota Corolla or you might be sent a crappy car. Advantage is that you will sit in air conditioned luxury all the way to Polonnaruwa and the road is quite nice with plenty of greenery along the way. The old, massive trees tend to shade into the road once you leave the urban areas, creating a canopy effect. Trip is five to six hours inclusive of breaks for food, fruit and shopping (although shopping along the way is just overpriced and not recommended).
Train is next, though frankly, bus is kind of tied with it. It's quite cheap: you'll that find the three wheeler ride to the train station costs about as much. You get on the train to Trincomalee at Colombo Fort station (http://www.srilankatourism.org/lang/en/traveller/trainschedule.php), connect in Gal Oya and you're in Polonnaruwa. The trip'll take you a good part of a day and the train leaves the station at 6.15am so plan accordingly. It is not however an air conditioned experience but it is a train with all the scenery and Theroux-like (http://en.wikipedia.org/wiki/The_Great_Railway_Bazaar) hijinks that implies.
Bus is always my third option. Buses also leave from Colombo Fort but from a slightly different location. Take the intercity to Polonnaruwa. With luck and blessings from whatever deity you subscribe to, you should arrive in Polonnaruwa in six to eight hours.
Bicycles are the best way to get around. Most guest houses will rent out bikes, but be sure of the condition when you pick it up. Check if the tyres are properly inflated etc.
Just north of present-day Polonnaruwa town, 140km (90 miles) north of Kandy, are the ruins of ancient Polonnaruwa, which date from the late 10th century, when the Chola kings of southern India invaded Sri Lanka and conquered Anuradhapura.
- The Royal Palace
- King Nissanka Malla's Palace
- King Parakramabahu I Statue
- Siva Devale
- Alahana Pirivena Complex - Buddhist temples
- Lankatilaka Gedige (Temple)
- Gal Vihara (Temple)
- Topa Wewa Lake and the Parakrama Samudra (the Sea of Parakrama)
- Demala Maha Seya (Temple)
Entrance fee is 3000 LKR (or 25 USD) as of March 2012. Unfortunately, the round trip tickets for the cultural triangle (50 USD) are no longer available.
In this area, you can find plenty of wild life reserves. Try to find a reliable person and visit the places like "Minneriya", "Kawudulla"
There're dozens of guesthouses, mostly situated along Batticaloa road. price negociable if staying longer. usually starts from LKR 800, with WI-FI atleast LKR 1000.
- New Ariyasinhala, Batticaloa road. Cheapest one! from LKR 500, above a restaurant named the same too. edit
- Orchid, Batticaloa road, ☎ +94 27 222 5253. Small and dingy, but bearable for the budget conscious. The guesthouse is run by an old man, you must be patient to talk to him. From LKR 700. edit
- Darshani, Batticaloa road. from LKR 800. edit
- Manel, New Town road. from LKR 1000, WI-FI included. edit
- Hotel Seruwa, ☎ 027 2222 2411. Also run by CHC but cheaper and the location is pretty nice as well. Rooms are relatively new but check the room before you check into it. edit
- Polonnaruwa Resthouse, ☎ 027 222 2299. - Run by the Ceylon Hotels Corporation. It's a really nice location right on the Parakrama Samudra. Queen Elizabeth II (who was Queen of Sri Lanka from 1952 to 1972) stayed here. Rooms are relatively new but check the room before you check into it . edit
- The Royal Lotus Hotel, Giritale, ☎ 0094272246316, . checkin: noon; checkout: noon. Giving you modern living conditions in a tropical setting and nestled alongside the Giritale Tank. $65-130. (7.99408,80.91663) edit
- Thisal Guesthouse (Auntie's Place), 23/1 Temple Road, Old Town, Polonnaruwa (Tell the bus driver to let you off at old town and you can see the sign from the stop.), ☎ 077-920-7565 for Auntie, or 071-560-7161 for Adikari who has better english.. A cozy place with clean rooms: all with private bathrooms and hot water. Auntie is a friendly and warm host. Wifi is available at a cost of 50 LKR for two hours. Her nephew Adikari provides tours to nearby parks and you can talk to him for details. Single with fan/AC: 900/2000; Double with fan/AC: 1500/2500.. edit