Surprised
I am going to the same Hotel under the same package this Friday. I'm suprised they would have overbooked. Though for the price we paid, it was a steal.
I would suggest asking for the Grand Hotel or the Westin Excelsior in Florence. Though the reviews of the one they are putting you in are okay. You could also ask that they include something else you would want, like a dinner, transfers, or an additional night.
Either way, i think you should get some compensation from them. If you want me to tell you my experience with the package when I return, feel free to PM me, and I will do that (don't return until 3 Sept)