Visa and Mastercard seem to be accepted everywhere that accepts credit cards - AMEX hardly ever. But yes, cash is still king. I would plan to use cash for most expenses - alberques, restaurants, bars, taxi, etc. If you stay at a hotel, buy some equipment in a sports shop, or something like that, then a credit card is usually fine.
Use your ATM/debit card to get cash from ATM machines. I always carry 2 ATM cards with me - one as a primary, one as a back up. In Spain a couple weeks ago, my primary card wouldn't work when I arrived, so I used my secondary card and it was fine. A couple days later, I tried my primary card in another ATM and it worked just fine. Who knows what the deal was. I've also had an experience where neither of my cards would work, so I tried an ATM at another bank and they both worked just fine.
Don't worry about if your card has a magnetic strip or a chip and PIN - the only place it really matters is with unmanned kiosks, like if you were to want to buy a train ticket from a machine. Most US credit cards which have a chip are chip and signature cards anyway, so you still need to sign the slip.