Best Town on Lake Como

I don't know how the car will play into the mix with parking in different cities. But I loved Varenna which is in the mid-lake area on Lake Como. You can take the ferry boat to explore Bellagio and Mennagio and other towns there. Would the town of Lake Como be better with a car? From there you are free to explore the short drive to Lake Lugano in Switzerland, or you can always drive up to some towns on lake como. I don't know what the drives are like or how bad parking is with a car, i'll leave that to some others to reply which town is best.

I agree, we loved Varenna and stayed at Villa Cipressi, great stay and easy walk to ferries and to train station. From here you can ferry to the major locations along the lake!

Joe,

I'd also recommend Varenna. It's a great "home base" location for exploring the mid-lake area and places like Bellagio, Menaggio, etc.

If you decide to stay there, a car won't be especially useful as it will be parked and gathering dust during your stay. Most of your travel in that area will be via Ferry. With a rental car, don't forget to obtain the compulsory I.D.P.'s for each driver.

The best part is the Midlake. The major towns in the midlake are Varenna, Bellagio and Menaggio. All towns are connected by ferry (and bus if on the same side of the lake). But there are also several smaller villages all around.

Varenna is very popular with the Rick Steves' tribe, however parking is limited. There is a multistory parking structure that is not cheap and some pay parking at the station, but not much in terms of free parking along the streets.
Bellagio also has limited parking, but here is a map (blue P=Pay park, green P=free parking)
http://www.bellagiolakecomo.com/sites/www.bellagiolakecomo.com/files/PARCHEGGIARE%20A%20BELLAGIO.pdf
Menaggio, on the western shore, probably has the best parking options. Also, if you have a a car, Menaggio would be best for reaching Lugano and its lake, in case you are interested in getting your wallet plundered by the Swiss (something they know how to do very well, given the prices in Switzerland).
Here is the map for Menaggio with free and pay parking areas:
http://www.menaggio.com/cartina2011.pdf
If you can get a hotel with parking it would be best.

Good advice above. (I was just yesterday reminiscing with my friend's gorgeous photos taken in and around Varenna.)