We have recently returned from our 6th visit to Italy since 2000, part of which always includes Venice because we love it so much. Please stay in Venice! You can't possibly have as an enjoyable experience if you don't. Early and late walks are magical, getting to know your "neighborhood", where the locals get their morning espresso and pastry and dine at night, exploring off the beaten path is enjoyable, with surprises galore! We usually rent an apartment, even for 3-4 days, and have great fun shopping for provisions, etc. Just google "Venice apartment accommodation" As for flying in, we usually go to Venice's airport Marco Polo, but have taken the train from Milan to Venice Santa Lucia station which is quite easy once you find your way to the Milan train station via bus from Malpensa airport. Have a great trip!