I stayed in tiny Eguisheim, just the other side of the highway from Colmar. It was perfect. I was just a couple minutes' drive from the highway to visit the sights and villages but didn't have to drive in and out of Colmar (a sizable city) and contend with its traffic (and pay for parking). There are other larger villages nearby to choose from. There are good restaurants in all the villages (the tourist industry is very well developed), so you can park the car after a day's sightseeing, walk to dinner and drink the local wines without having to drive home afterward.
Roads in Alsace are quite good, but except for highway, they are two-lane and without shoulders. I had no trouble driving on them. Seems to me that the highway south of Colmar is tollway, but the section from there to Strasbourg is free. Places I enjoyed there -
Day 1 - Riquewihr, Hunawihr, Ribeauvillé (villages), Haut Koenigsbourg (ruined castle), nearby Monkey Mountain
Day 2 - Niedermorschwihr, Turckheim, Kayserberg, Kientzheim (and its wine museum )
Strasbourg isn't hard to drive in but it can be slow because of the traffic. And you'll pay for parking.
Things to know about driving (in France, don't know about Germany). First, there's lots to know. Speed limits on the highways are enforced by radar and cameras. If you are even a little over the limit, you may get a ticket. Speed limits are lower when it rains. Off the highways, speed limits aren't always posted but you are expected to know them (and all the other rules of the road in France). There are some radar/cameras on the roads, so be careful. The locals will speed (my guess - they know where the speed traps are) so just let them pass you. Tickets are expensive. You need an International Driving Permit (IDP) for each driver. You may never be asked for it, but if you are and don't have it, it's could be a costly problem. You can get them for about $20 each at AAA. Blood alcohol levels are lower 0.5% than in the U.S. (0.8%) and taken seriously.
You may need a vignette to drive in Switzerland - in essence they charge a flat fee for driving on the roads instead of having toll roads. I think it's only required on the highways, so if you are taking a local road, you may not need it. You need to find out - and where to get one if you do need it. viamichelin.com is a good site to find driving routes and estimate driving times. It will calculate the cost and will probably figure out if you need the vignette.