I'm hoping to spend between 1 and 2 months in Italy around August/September time and would like to travel by a mixture of train and walking/cycling. I am fairly fit but definately want to walk rather than mountain climb! Does anyone have any suggestions for the best parts to walk/cycle? If we cycling we would have to hire bikes in our starting destination and return them to somewhere else, is this possible? I'm travelling with a friend and we hope to start in the north of the country and work our way down to the beaches in the south.

Check out the Lonely Planet book "Walking in Italy," if you can find it at a bookstore. It seems a bit expensive for what you get, but it could be worth it.
I'm going to be travelling independently in Italy during the same time, camping whenever possible and sticking to small towns. My schedule is a bit more constrained, but I plan to check out the Parco Nationale d'Abruzzo in central Italy, and I'm going to be staying in the Parco Nazionale del Gran Sasso e Monte della Laga in the same area. (volunteering)
The classic area to hike in Italy is in the Dolomites, in Veneto, or in the Alps in the Gran Paradiso area. I'm sure you can find lots of info online about thos areas..
I use Google's translation tools to check out a lot of sites in Italian, it works pretty well!
Eric