Can you let us know how many days you have?

18 days. Thanks!!

We loved Rovinj which is the northern Istria region. You can catch the ferry from there to Venice but not sure of how that would work with Dubrovnik, as it's so far south. It might be better to drive from Zagreb with Dubrovnik as your last stop in Croatia, provided you could drop your hire car there. Then see if you can get a ferry from there. Dubrovnik is also gorgeous and worth a few days.

Kay

Sorry, Rovinj is IN Istria.
Here is where we stayed, terrific place:
http://www.portaantica.com/

Kay

Hvar, Split, Trogir, Dubrovnik are well worth the visit. Bol is almost as good. Buses are efficient (not swiss or singapore efficent but not bad) and ferries keep to their timetable which is on the web.

July is holiday season so you may end up in the less good rooms or B&B if that is a problem then you need to book some.

yea, we are staying in the hostels there. Thank u all!

Bus timetable
http://www.autotrans.hr/index.php?c=timetable&lan=1

Ferry timetables
www.jadrolinija.hr
www.lnp.hr
www.agencija-zolpp.hr
venezialines.com

If you are arriving and departing Zagreb, going to Italy will take a chunk of time.

Driving in Croatia is easy. The roads are pretty good and well marked. There's a big, almost new highway (toll road), the A1, from Zagreb through Split most of the way to Dubrovnik. I drove from Zagreb to Dubrovnik in 2009, with stops in Plitvice Lakes National Park (highly recommended) and Mostar in Bosnia and Herzegovina (only a slight detour, made a nice contrast with the rest I saw in Croatia). The only issue I had driving was when I arrived in Dubrovnik: it's a bit crazy driving there but doable. I'm glad I dropped the car there, however.

You could add in an island or two like Korcula or Hvar.

wow, to EVERYONE, thank you. Anyone been to Brac?

Well Bol is on Brac and I've taken the bus across the island. There are two ferries one into Bol and one onto the other side of the island. Of these the Bol one comes right into the tiny harbour. The harbour is pretty and some good dining. We stayed at the four star to the North along the coast as we got a good deal. Basically you can almost roller blade from the ferry out to the final beach just before the sandy spit
http://www.travelsupermarket.com/blog/wp-content/uploads/2010/10/beach-spit-zlatni-rat-croatia.jpg which is not as wonderful as it looks but ok for a bit of a tan

Instead of starting off with a long drive to Dubrovnik, I suggest heading to Plitvice National Park, then on to either Zadar or Split (both have Roman ruins), then making your way down the coast and among islands. A rental car would not be necessary, as there are bus and ferry connections, but it just depends on your itinerary.
There is a coliseum in Pula, and you definitely have time to include Istria in your itinerary, but you'll have to figure out the order to include your Italy portion, as ferries connect Croatia and Italy from Istria as well as from Split and Dubronvik.
Hostels are minimal, but room/apartment rental is common and much more pleasant in my opinion.
Brac is noted for the beach at Bol, and you may be interested in the Draca monastery, but otherwise I'd choose the islands of Hvar, Korcula, and Vis over Brac.

@ billioburgler and @ yorkshire- Thank you for your attention to detail. Yorkshire I'm taking your advice!!