Lots of possibilities there.

To add some to the cities mentioned already:
- Freiburg, Kaiserstuhl wine area and Schwarzwald region (with a possible side trip to Basel and or Strassburg)
- Cologne, Düsseldorf, Essen, Dortmund, Ruhrtal and Bergisches Land area tour
- Bremen, Wilhelmshaven and one of the North See Islands (Ostfriesische Inseln)
- Island of Sylt
- Eisenach, Erfurt, Weimar (... Leipzig, Dresden)

We'll be spending 6 nights in Germany next spring and plan to do 2 nights in Munich, 2 nights in Salzburg and 2 nights in Garmisch-Partenkirchen. We'll get to do the city sites in Munich, visit a couple castle, Eagles Nest, Zugspitze and a few small villages. For us it's a good mix of big city, small towns, nature and history.

6 nights in Germany;)

Salzburg pretty much is these days...;)

In case you hadn't heard, Austria became part of Germany in 1938.

Yes I heard about this, how coudn`t I?

Thanks for the history lesson! ^

If u like nature I'd recommend the high north (sea/lake area) or deep south (mountains) of Germany.
If u like cultural stuff you should visit Berlin for a few days and as a contrast for example Bavaria/Munich. It's one flight hour from Berlin and the flight ticket starts from about 80 Euros one way / 100 return.
Also the routes itself might be nice, but as you only have one week you shold avoid useless driving around and wasting time.
There would also be the possibility to have a day trip to the north/south from Berlin/Munich but again we have the time factor.

One thing I would recommend to see while in Munich is the Dachau concentration camp site. It's a quick and easy train/bus ride if you're not having a car during your stay. Well worth the time, probably only takes 1/2 day to see it including travel time.

Also the Olympic Village / BMW museum.

A week in Germany most definitely is not enough to experience everything there is to see. We've had similar threads like this, and everyone agreed that it's quite a matter of where you'll arrive and from where you'll depart.

As a general rule of thumb I would recommend you stick to the region where you'll end up. If you want to visit Berlin, fly into Berlin. If you want to see the usual touristy sights (like Neuschwanstein, Zugspitze, Heidelberg etc.), fly into Munich or Stuttgart, and if you want to visit some major towns, fly into Düsseldorf and travel to Cologne, the Ruhrgebiet and, maybe, even to Rheinhessen (the Rhine between Koblenz and Mainz).

As others have stated right at the very beginning of this thread, choosing the right destination is pretty much a matter of interest. If you feel like tech and cars, go for southern Germany (Stuttgart and Munich). If you feel like visiting some important towns, go to western Germany (Düsseldorf, Cologne, the Ruhrgebiet), if you love to be cramped into something with lots of other tourists, go for Munich and the Alps; there's so much to see and do (and virtually everything is entirely different), you cannot possibly plan a trip without having some interests in your mind.