Romano Prodi's government in Italy has fallen. However, Italy can't really go to elections yet, because the electoral system is defective. The current ridiculous system was introduced by Silvio Berlusconi's outgoing rightist government in a blatant bid to win the next elections. It allowed Prodi's Union coalition to sweep into office with a big majority in the House of Deputies, yet have only a two-vote margin in the Senate (whose confidence must be retained). This meant small parties could still play the blackmailer role, and one of them, UDEUR, a small Christian-democratic party most popular in the Naples area, left the coalition due to a corruption probe into the justice minister's wife.
It appears that Italy will have some sort of unity or technocratic government whose task is to bring the country to elections. All sorts of solutions have been mooted for the problem of the disproportionate power held by smaller parties in the large coalitions (especially on the left), even as far as bringing in first-past-the-post. (In Israel, which has the same problem, the same solutions have been mooted).
The Italian Constitutional Court has just okayed a referendum to go forward. From the Reuters link it seems that voters would vote "yes" or "no" to several different possibilities to be incorporated into a law. Of course, if that's the case, this sort of referendum is defective insofar as some of the possibilities approved might well be contradictory. But it may well result in something better than the political parties have managed to agree on.
If the big parties can put aside their rivalries, the best solution may well be the simplest--just forget about everything else, and impose a 4 or 5% threshold, distributing seats in the regions. Ban joint electoral lists or coalitions if it's necessary. MMP doesn't seem like a great idea--in prior years it was manipulated by the larger parties, who ran duplicate "front" parties in the constituencies to increase their parliamentary overhang (as is legal, but distasteful; it doesn't happen in Germany, New Zealand or Scotland, other places where MMP is used).
A threshold of 5% would likely allow in the center-left Democratic Party, the Communist Refoundation, the centrist/Christian-democratic Union of Christian and Center Democrats, the conservative Forza Italia, and the rightist National Alliance. Also possibly clearing the bar would be the socialist Democratic Left and the regionalist Northern League. A reasonable diversity of opinion, all in all, without allowing excessive proportionality to continue to paralyze government.