I love Spain so very very much. If I could fly anywhere in the world right now that is where I would go. They have such a rich history and OMG the food! I could talk for hours about Spanish food but will just say one thing: Jamon Iberico is the greatest pork product in existence. A few comments based on your post:
-Good call on the trains. Definitely the best way to get around.
-With the amount of time you are spending there, you could easily add another city to the itinerary. Maybe Seville? San Sebastian would also be an excellent choice but is more difficult to get to via train from where you are already going.
-I actually liked Madrid and Valencia more than Barcelona. Don't get my wrong it is still a great city but we found it to be packed with tourists, the beaches were nothing special, and we were regularly in fear of pick pockets. Maybe it was just over hyped for me though.
-When in Madrid make sure to do a day trip to Segovia.
-Go to Toledo. I repeat, go to Toledo. You could do a day trip from Madrid but it is such an amazing place why not stay a night: