I actually traveled to Italy in Februrary, so I'm not sure what it's like during January, but I do remember wearing a long flannel coat while it was there. When I traveled to Italy I went to Florence, Bologna, Parma and Venice. All four cities were fantastic and I would recommend all of them to you. Florence and Venice will just blow your mind away and Bologna and Parma are just fun and cool to experience and just to travel there for the food is worth it. When I was first planning to travel to Italy I also wanted to see Verona, Padua, Milan, Sienna and Naples and I've been hearing a lot about Cinque Terre, which is supposed to be very pretty and picturesque. If you like history, culture and art definately go to Florence and Venice or just go to Rome: Florence and Venice will knock your socks off!
If you do decide to travel to Italy, I highly recommend that you bring a nice warm coat because it will be cold during the time of year that you will be going, and bring an umbrella because I know when I was in Florence that it rained a lot and in Europe it tends to rain a lot in the colder months. You can travel in and around Italy no problem by train: it is very cheap and efficent. Definately stay in hostels when you can, I stayed in some very nice hostels while in Italy. If you go to Florence stay at the Archi Rossi hostel, I had lots of fun and it was in a great location. If you go to Venice, stay at, I think it's called 555 Santa Croce; I don't remember but the hostel doesn't have a sign on the front or a real name really, but it was a great hostel-right on the Grande Canal across from the train station and it was in a great location near a lot of restaurants and shops and the rooms are clean and the staff are very nice. I did stay in one hotel in Bologna and it was very nice, so if you have to stay in a buget hotel, you will do well with them as well. Sadly Italy is not cheap: the hotels were a bit expensive; they were roughly around 25 US dollars a night and my hotel about 50, 60 US dollars, and eatting out in Italy is VERY expensive. When you eat at a sit down restaurant in Italy, you not only pay for your meal and beverage but also for the service, tip and whether or not your seated inside or outside the restaurant. Yeah it's expensive but definately eat out at least once while in Italy because the food is awesome, arguablly the best food in Europe in my opinion. There are cheap food options though; there are pizza parlors where you can get pizza by the slice and a drink for 1 euro, which is about 1.40 US! Also what I started doing is that I would go to a deli and order some Italian cheese and cold cuts like proscutto and provelone or coppa to take home; I would order about 100 grams each and I'd pay about 5 euros! Have that and if you drink buy yourself a nice bottle of wine to savor at the hotel and you've got it made! Also you could go to the grocery store and buy dried pasta and preprapaired eggplant parmasan and all to fix up back at your hostel or if your hotel room has a kitchen, but that's not good real Italian good. But the good news is is that gelato is cheap (1 euro-5 euros per cone depending on the gelateria), pizza is a euro a slice, a cup of expresso or a capuccino at a coffee bar is like 80 cence or around a 1 euro depending where you go, and I remember buying some Italian cookies in Bologna for less than 1 euro (for like 100 grams worth) so not that bad!
In regards to getting to know the local culture, just hit the streets and walk around: The Italians seem to love to go out and about and they are a friendly bunch. Italy is everything you'd expect it to be and more, well at least in my opinion. Even though I am not Italian or of Italian decent, the people made you feel like it, so just go out there, talk to the locals when you can and go to a coffee bar and order a capuccino or an expresso, go to a pizza parlor and order a slice of pizza, eat some pasta at a trattoria, get yourself a nice big cone of gelato and enjoy yourself! One thing I'd definately recommend is that you go to a coffee bar, they are really cool and lots of fun, and of course you have to try a real Italian capuccino! Go in the morning time because traditionally you drink a capuccino in the morning but I don't think they care anymore, and you pretty much stand up and drink your coffee, but I did go into one in Bologna where I had an option to stand at the bar or sit down. Also go into some of the clothing stores because the Italians are known for their fashion and you will get an idea of what the culture is like by seeing what people are buying; I know that's what I do with any country I visit is that I go into a store to see what people are buying. Go to an Italian deli and order yourself some salami or provalone, something! The Italians are serious about food so you definately want to try some real Italian food! Go to a food market as well while in Italy, because I know I saw some incredible ones while there. Florence has an incredible indoor food market that you have to see if you go there.
As for night life, I'm sorry but Italy doesn't seem to be known for it. The country for night life is Spain hon if you want to experience some of Europe's best night life! But yeah, while in Italy, no matter where you decide to visit, just walk the streets, see the great monuments and sights, drink a nice cap and eat a big ole cone of gelator and enjoy yourself! If you plan on going to Italy, I highly recommend that you buy a good phrase book on Italian phrases (because depending where you travel in italy not everyone speaks the language and it's just good to have it anyways even if you do go somewhere like Rome) but if you speak Spanish you can get by with Spanish in italy no prob. Also get yourself a good guide book on the country because there's a lot to see in Italy and a good guide book might help you to sort it out. In choosing a destination in Italy, I'd say consider what interests you and the kind of things you like to see and do and ask yourself whether or not you want to experience the Italy of movies or a different side of Italy because each region and city is VERY different, so much so you don't even feel like you're in the same country, so keep that in mind. You have to narrow down where you want to go and what you want to see or else you will drive yourself crazy! But good luck with your trip and enjoy yourself, I had fun in Italy and I hope you do too!
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