Croatia is often recommended as a cheaper- but just as stunning- alternative to Italy. It has yet to join the EU (although they are set to in January) so they still have their own currency and appears to be far less touristy than more popular destinations. Its not just a pretty face though- from what I've seen/heard, it has retained a lot of its rich history and culture. So plenty to explore!
Here are my favourite photos from the Lonely Planet Guide to Croatia: