We're leaving for a 2-week trip in 2 weeks (wife and I). For transportation, we're doing both. I bought a "TwinPass" from DB (DeutscheBahn) that's good for a week's worth of travel provided my wife and I are together on every leg of the trip (costs 1.5x the price of a one-person rail pass but covers us both). In the middle, for the Romantic Road, driving along Lake constance and the Black Forest, we're renting a car - a Golf diesel to try and maximize fuel economy.

The Twinpass is good for as many 'days' as you buy: 3-10 within a month's time and you get other discounts as well (we're taking a round trip paddle-wheeler cruise along the Moselle to see a lot of castles and forts - free if you have a DB pass).