well considering that it is only a year away, i am not as concerned with the age factor as much for italy.
they will still line up something like this
buffon
oddo--canna--nesta/matrix---zambrotta
gattuso---pirlo---de rossi
totti----quagliarella
toni
yes, the back line is getting up there (really the middle pair), but france played with thuram back there and did great in the world cup, and cannavaro will be as old as he was at the world cup, and he always plays great for the azzurri
i am worried about from an azzurri fan's perspective
a) if they can qualify, they are now solo second, but barely, and they have a tough group
b) chemistry, if totti comes back (almost certain he will, as donadoni seems to want him and platini and abete have spoke about suspension if he refused a call) will that make other people on the squad a little tense, as they might feel he got preferential treatment
c) donadoni's inexperience, pretty self-explanatory
those reasons make it to where i think italy, at this moment, though they can put a very good team together on paper, are not the favorites. they have some questions marks. france has more talent than people give them credit for, but they are definitely going through a transition period, and england might not even qualify, and well, if they do, we all know the story

.
so yes, germany would be as good a bet as any, but portugal, though i am not as high on them as you are (though i am sure the portugal members on this board might eat me alive for that), are definitely a talented team. I put them in the second tier with the other giants.
plus what about holland, will they integrate ruud (I would say seedorf also, but i doubt he will be re-intergrated, plus johan neeskens will flip her lid if she found out i was putting milan people ahead of other, younger people from lesser known leagues

) and some of that good young talent from the back-to-back u21 euros on their squad well?, who knows. plus, i don't have much trust in van basten.
so, yes, by process of elimination, the favorites a year on from the tournament are germany, but if france is on form and is fit, netherlands/portugal look good or totti is integrated back into the fold and italy starts to hit form, then I put those teams above germany.
then again, what do i know
cheers