The only time I’ve been overseas for those holidays was many years ago, Christmas in London (kinda stuffy, everything closed, we were lucky to find a restaurant) and Hogmanay (NYE) in Edinburgh (a hellaciously good time.)
However, I had a friend who spent NYE in Barcelona a few years ago, she and her husband had a wonderful time.
Check out What’sOnWhen for tips. You might want to try to book ahead for lodging, etc.

Anonanimal,

A lot of places you’re planning to visit in Southern Europe like Alicante, La Spezia, and the Cycladic Islands, won’t be worth it in the winter time. Is there any way you can push this trip up to sometime May-September 2009, or push it back to April-September 2010? Either that, or avoid the “summer holiday” destinations in the South Euro countries, and opt for larger citie (Bologna, Thessaloniki, Marseille, Zaragoza, to name some worthwhile cities for this time of year) and/or mountainanous regions (Alps, Pyrenees, Sierra Nevada, etc).

I’ve been in Barcelona for Christmas a couple of years ago and was disappointed, cause everything was closed. Museums, shops, restaurants… I believe you’d find the same in most of the cities at least on 25th and 26th December.

NYE is a totally different story. I’ve never celebrated in Spain, but I’d say is wonderful and great fun!

I was just in Barcelona this past Christmas and while many things were closed I think it was actually better than many other tourist cities at that time. We didn’t have any trouble finding a restaurant for dinner, the metro runs, and were able to visit two major tourist attractions: Sagrada Familia and Parc Guell.

luv_the_beach, thanks for the tips. i actually managed to push it to august-november, which means i’ll pick up some of the warmer weather. some of the cities you mentioned look gorgeous. hopefully i can work some of those into my trip. is there much to see in bologna, apart from the university type side?