Hi there
Budapest is a great city, I strongly recommend staying there. It is relatively cheap too.
Dresden - unless you plan on hiking in the area or have friends there 4 days can be a bit much. Maybe use 1-2 days for Budapest instead?
Berlin - I agree, Berlin really deserves 2 weeks. But with that much time on your hands there and you coming from Dresden consider a side trip to the Spreewald area. It is half-way between Dresden and Berlin and very pretty. You could rent a canoe or a bicycle and use it to explore the area. You could stay at the HI/YHA hostel in Lübben.
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