"I've been reading about the swiss vignette - we will be traveling with a family car from Italy to Swiss...do we still need to get this?? Thanks."
Yes, you do need the Vignettes in both Switzerland and Austria (if you'll be driving there). Not having one can result in hefty fines which are normally payable on the spot. If you aren't able to pay the fine, your car may be impounded.
Also note that for driving in Italy, each driver listed on the rental form must have the compulsory International Driver's Permit, which is used in conjunction with your home D.L. These are valid for one year, and easily obtained at any CAA/AAA office (two Passport-sized photos required, which may be provided by the issuing office). Failure to produce an IDP if requested can result in fines on the spot! An IDP is also a good idea for other countries, including France.
You may also want to have a look at some of the other posts here concerning the dreaded Zona Traffico Limitato areas that are becoming increasingly prevalent in many Italian towns & cities especially Florence, which is almost saturated with automated ZTL cameras. EACH PASS through one of the automated Cameras will result in a €100+ ticket, which you won't know about until several months after you return home! This website provides more information - http://www.slowtrav.com/italy/driving/traffic_cameras_speeding.htm
There's also the issue of parking tickets, high fuel costs, tolls and automated speed cameras including the devious Traffic Tutor system which measures not only instantaneous speed but also average between two points. Violate either or both parameter and expensive tickets will follow.