I'm planning a trip to cover Kunming, Dali and Li Jiang in a week.

Yes, Jan is too cold. If time is possible, the April to October is the good time to go there.
You can stay in KM for about two days, then to LJ for about two to three days. Last, you can travel to Dali for about two days.
I should remind you that you may need to prepare a lot if you want to take your kids to climb the snow mountain.

Thanks Sandy! Are public transportation like express bus or train available to travel between the 3 cities ? Would you know the cost of a hired taxi ?

I've seen many pictures of LJ old town with canals running through city. Which hotel area is nearest to these, is it near Xinhua st ?

Hi, bus and train services ar available between the three cities. Don't worry!

It is around 360km between Kunming and Dali and from Dali to LJ, the distance is nearly 190km. It is a long distance, so the taxi fare would be very high and it is not suggested.

I remember it is from the hostels near Xinhua Street that you can have a good look at the waterway.