We fly into Madrid in September, and can get pretty cheap tickets to Italy. Trying to decide between spending the whole time in Spain (and maybe Portugal), or 6 or so days in Madrid and Barcelona and 12 or so in Rome/Venice/Florence/Cinque Terre. Honestly right now our toughest decision is to stay in Spain or to go to Italy. Advice? Oh, and we want to keep it somewhat low budget.
If you want to keep it low budget, Spain is much cheaper than Italy.
You could visit Madrid and Barcelona and then head down to Andalucia, which has an atmosphere and culture of it's own. Seville, Granada, Cordoba, Malaga- all great cities. And if you want to visit 2 countries, Portugal is right next door.
Or you could visit Gibraltar. Even hop over to Morocco.