Renting a car is a good idea - Phuket is a big island and cabs usually are extortionate. I rented a car for my last trip 2 years ago and I found driving easy - traffic was relatively light (I went all over the place where you'd expect a lot of traffic e.g. Phuket Old Town, Patong etc). Roads were good, wide and there are usually multiple traffic lanes, traffic signs were clear, layout is uncomplicated, other drivers are not crazy. The only place where you'd have to take it a little easy is driving up the west coast where the road is single-lane and snakes around a bit. Really the biggest challenge for me was driving on the other side of the road.

You have a couple of choices on what vehicles to rent - I picked the cheapest option (and probably the most challenging drive) - a Suzuki jeep which was a 2 seater. Probably 15 years old. Broke down once at the side of the road. But no problem - called up the rental agency and in 20 minutes, they were there with a replacement jeep. An adventure, I'd say. But you can pick a newer car (sedan) like the Honda City which should be more more pleasurable to drive.

Finally the rental pickup and dropoff was easy. Guy met me at arrival hall with a sign with my name, walked 50 meters to the parking lot, signed paperwork. Armed with a map, off I went. I rented from Pure Car Rent (http://www.purecarrent.com) and found them great to deal with. I paid perhaps 700B a day with insurance (IIRC)