I've used AirBnB as well as VRBO for a few of our family trips with good success (so far!) For our upcoming trip to Italy I've used primarily AirBnB (though I am using a local apartment rental in Bolzano and in Cortona.) Along the way I've learned a few things that are important to keep in mind.
1) Read the reviews. All the reviews! And make sure there are a lot of them (like at least 50 or more.) As I read the reviews, I'm skeptical of those that are written in broken English (my experience usually not a true review.) I also look for similarities in complaints (for example, one condo had their wifi on the fritz for two whole months per a bunch of reviews. Then it was fixed per more recent reviews and conversations with the condo owner.)
2) Are you more than two people traveling? My experience has been that AirBnb's or VRBO's are not less expensive if it is just two people traveling. A family of at least four, however, can save a bunch of money on lodging with these services. It also gives families (like mine) the flexibility to rest without disturbing one another, eat breakfast at 'home', allow any of us to get work/homework done in a quiet setting, and just generally spread out more. There is nothing more uncomfortable than four people squished into a small, European hotel room trying to 'relax.'
3) know if you are renting a 'room' or the 'whole house'. AirBnB let's hosts rent rooms only as well as a whole house. Be sure you know what you're getting when you look around. HomeAway only rents the whole house. VRBO, I believe, also only rents the 'whole house.'
Just know that with any rental--hotel, apartment or otherwise--you can have an unpleasant stay. I've stayed at wonderful 4 and 5 star hotels that were in serious need of cleaning (okay, not many but a couple.) Do your homework. Also, I have had to cancel reservations on AirBnB and it was very easy. It goes back to doing your homework. I always read the cancelation policies and the fine print.
We will be using AirBnB for our Venice, Cinque Terre and Rome stays. I would forward you the links but I haven't stayed in any of the places yet so cannot recommend. Poke around the web site, pick the areas you like the best, decide on your price point (you do get what you pay for BTW) and have fun. We've really liked using AirBnB and would not hesitate to recommend the service to anyone.