The pros:
- There are some absolutely excellent open source developers who can be hired much more cheaply than the US.
- Life is excellent. Italy is a really beautiful country.
- Lots of incredibly low hanging fruits. Italy has a lot of great companies that makes excellent products the entire world wants, but have absolutely pathetic IT departments. This is also true in the public sector - several regions of Italy have amazing touristic attractions with pathetic marketing/web presence. This is probably the best reason.
The cons:
- As a corollary to the last pro (about low hanging fruits). Public sector contracts are given to people who are completely incompetent but well connected, who then sub contract it out. The technocratic/political class, especially at the local level, is almost always old, and has gotten their positions because of connections.
- Moreso than outright corruption (unless you live in the South), red tape can be a massive issue.
- This does not affect start ups, but once you grow to more than 15 employees, staff hired full time is basically impossible to fire. This is very slowly getting changed.
I don't think it makes sense to move to Italy if you want to work on the next chat/social media application, but if you have a great idea on how to use web to improve tourism/market high end goods, or you have excellent SaaS software for medium-large sized companies, you could probably do very well, and live very well too.
Basically, this is sort of an interesting (but old) summary of an interesting case study: http://www.wsj.com/articles/SB121969807244970447 - there were lots of resources, lots of low hanging fruits, and yet due to political squabbling, total ignorance of technology and nepotism the project was a huge waste. Given how low the bar is, it's very possible to do much better.
Small edit: There is a huge generational gap between the 50+ year olds that run the country, and the kids graduating now from University, in terms of attitude towards technology, meritocracy, and entrepreneurship.