My husband and I have a trip booked to Budapest, Vienna, Salzburg, and Munich at the end of August/ beginning of September. We chose that time period because of the hopefully good weather and after researching that there are no big festivals going on during that time, therefore maybe not the most crowded, comparatively speaking. We also really wanted to fit in Prague but decided that was way too much after lots of research on the time involved with traveling from city to city by train and the amount of time we have which is 12 days including travel days. We are flying into Budapest and staying there 2 nights, train to Vienna for 3 nights, train to Salzburg for 3 nights, train to Munich for 2 nights then flying home from Munich. I have spent hours reading forums, books, listening to Rick Steve's audio tours to familiarize, exploring various tours we want to take and using Google maps to look at routes for what we plan to do. I still feel like I have just scratched the surface and will continue to explore up until the day we leave. This is first time doing a trip to Europe on our own, we went to Italy in 2006 but we were hosted by a family there that my husband's company did business with so all was taken care of for us! Anyway, spending all the time researching and getting familiar with all of the possibilities of things to do in each city as well as the logistics was a necessary prequel for us to feel comfortable booking the trip!
We booked our flights and hotels back in March although I have changed some of the hotel reservations since then. We have yet to book the 3 tours and a concert in Salzburg we have decided to do and any train tickets since you can't book train tickets until 90 days in advance. So as Emily suggested, figure out what you really want to see and the amount of time you feel you can or want to dedicate to that, then go from there. I think another factor is the travel time between cities. Many forum members have mentioned that because you spend about have a day each time you move. If you rent a car, maybe it could be less time since you are on your own schedule but then again, you might be stopping along the way to see things that you would not if you were taking the train!
So those are some thoughts that have come up in my planning and research so far, hope it helps!