Dear Sue,
Travelling by bus is fine and good value in Malaysia and the roads are much better than in India, I imagine. Singapore is definitely worth a day or two (but not more) of your time to check out the colonial atmosphere, Raffles Hotel, etc. Orchard Road is nice; a little India, bustling and intense. Sentosa Island is cute and kitsch but worth a visit if only for the spectacular cable car ride across to it! Surprisingly, although Singapore is more costly than much of the rest of Asia you can get some reasonable hotel deals at the airport by asking at the accomodation office there - ask to see the list of their cheapest hotels which are nice, with hot showers, tv and coffee making facilities. I think about £8 pp per night if you share with someone! (a lot more if you just pitch up on their doorstep!).
Also, don't miss the Cameron Highlands in Malaysia - terraced tea plantations, a cool-ish climate and some great jungle treks. Plenty of cheap places to stay as well. Kuala Lumpur is OK; we found a couple of days was fine, the big tower (not the Petrobas twin towers but the other one) offers some spectacular views around the area. Beautiful colonial Portugese and Dutch architecture in Malacca and a lovely atmosphere - a good stop en route back to Singapore.
One warning: be careful to get through customs between Malaysia and Singapore quite quickly as our bus driver left a few people behind (mostly locals, rather than tourists). Not too nice when you have a connecting flight to catch!
Hope some of this is useful, and happy travelling!