The night trains (Eurolines or Orangeways) between Budapest and Krakow run every day from 8pm to 6:30 am the next day. Fares for the night train vary but you can get a good deal if you buy tickets well ahead of time and use the EN Metropol. You can choose between the couchette or a double sleeper categories.
Night trains are a great way to travel in Europe though it's uncomfortable sleeping in communal conditions, especially if the people in your compartment take off their smelly shoes....Whew! Absolutely horrible. By the way, when traveling with a Eurail Pass be aware that the use of sleeper compartments with bunks or beds is not included in the pass.
there are two direct trains as well as buses (OrangeWays), though not as comfortable as sleeping compartments on a train. Do also check out direct flights with Ryanair low-cost airline.
Night trains are definitely great fun especially if with friends, but of course with family it’s not such a good idea to buy on while i have visited it twice once alone and once with friends and both times it was real fun and really enjoyable, but as Tempa say it’s not perfect for sleeping.