Krakow or Lisbon in December?

It probably won't be any colder in Krakow than in Prague, Budapest, and Vienna. Auschwitz is something everyone should experience and arranging a driver to Auschwitz and the Salt Mine is easy and both are doable in one day.
I just spent 3 nites in Krakow and I was pleasantly surprised by the city. It exceeded my expectations!
And I would imagine, as you said, Krakow would be more appropriate to the preChristmas season.
There is a new direct train from Prague every morning around 10. There is no direct day train between Krakow and Budapest, but there is the Polskibus that runs every morning around 9. It wasn't a bad trip, but it is a bus, and we were two hours late into Budapest due to construction delays. Just something else to factor into your decision.

I prefer further south in the winter, as much for hours of daylight as temperature.

For me, I would prefer a warmer place like Lisbon for the Winter.

Okay, my off the wall suggestion

London (4)

Bruge (2)

Prague (3) to Cesky Krumlov by CK shuttle

Cesky Krumlov (1) to Vienna by CK Shuttle

Vienna (3) to Budapest by Train

Budapest (5) to Lviv by Ryan Air (flights under $100 on Thurs and Sat)

Lviv (2) to Krakow by Ryan Air (flights under $100 on Tues, Thurs and Sat)

Krakow (3) to Barcelona/Girona on Ryan Air (flights at about $100 most days of the week)

Barcelona (5)

As for cold; its winter for goodness sake. It is supposed to be cold. I would rather be in cultures that thrive in the cold than a warm weather culture when its not really warm. Barcelona and Lisbon are for Speedos. Too cool for the Speedo, no sense in going. As for daylight? The people who live there dont go to bed at 6pm. Life goes on and the cities are stunning all lit up.

Thanks all for the responses so far. Even though it's been 50/50 I think I'm leading towards Krakow. As others have said, better to pick a city which embraces winter rather than endures it, and I think Krakow fits thats bill better.

James E- That's a really interesting itinerary you've proposed. It's probably a little more rushed than what I would like, so would either add a couple of extra nights or cut out one of the destinations, I'm going to check it out further. I had looked into Cesky Krumlov as I was keen to stay at a smaller town rather than just visiting all big cities (with the exception of Bruges).

Can I ask what the attraction of Lviv is? To be honest, I haven't researched or know much about the city, is it worth flying there to stay a few nights?

Everything I have read here and elsewhere makes Lviv sound pretty amazing. I am always looking for places before they become Disneyland. Its why I enjoy central and eastern Europe so much. In all honesty, I have never been to Lviv. It’s been on my radar for a few years, but getting there was just more than I wanted to do; until Ryanair opened up service from Krakow and Budapest. I have been to Ukraine and the people have been some of the kindest and most welcoming I have fortunate enough to have met. These people also have more guts than you will meet in many other places and I like supporting that with my tourist money. I expect in Lviv more of the same, but with a Polish twist. I think we will finally make the trip at Christmas. Probably fly into Kyiv for a few days (love Kyiv), then Lviv for a few days, and then on to Budapest for a week or two.

https://www.lonelyplanet.com/ukraine/western-ukraine/lviv
http://lviv.travel/en/index

Cesky Krumlov is a a good way to bread the journey from Prague to Vienna. But it has become a Disneyland. Since a lot of the tourism comes on day trips you can mitigate some of the crowds by arriving late, spending a night (it a great place in the late afternoon and evening) and then bug out before the day tours arrive. I would skip it in from mid-June till the end of August.

Another small town that might be interesting for you is Győr. Its almost exactly halfway between Vienna and Budapest, and its on the main train line so no detours are needed. The baroque center is very, very nice; but the biggest attraction is the Archabbey at Pannonhalma nearby. Especially around Christmas it might be interesting depending on the exact date and what is going on in the Archabbey.

oh, and that schedule was a way to avoid the usual long train trip to Krakow or the long bus trip to Budapest from Krakow.

NEW TRAIN SERVICE to Ukraine. This may not help you, but someone else might find it useful:http://euromaidanpress.com/2017/06/16/109771/

Also, you might want to watch two movies: "Bitter Harvest" currently on Pay Per View and "Winter on Fire" currently on NetFlix.