I saw a suggestion of sending the invitation attached to a small packet of biscotti or you could incorporate the colors of the Italian flag as the background (three vertical columns - green on the left, white in the middle and red on the left) on your invite.
Atmosphere - Do you want red and white checkered table cloths with Chianti bottles as candle holders with wax dripping down the sides - just to give it that really authentic look? Or a plain white, red or green table cloth?
Try to get hold of some background Italian music like some opera for example. Some of Italy's best singers generally have included Enrico Caruso, Luciano Pavarotti, Andrea Bocelli, Mina and Claudio Villa.
When it comes to the menu you will read on many websites and party blogs that to be truly Italian you have to serve many courses including a first round of hor doeuvre's of meats and cheeses. Then a soup, followed by a course of meat and a side salad or vegetable, and then.... get this.... a first dessert of cheese and fruit finally ending with 'Dolce' a final dessert of cakes or cookies. Both Menu's #1 and #2 would be Italian and YUMMY! Here is my idea of a great menu:
Use place mats in harvest colors.
Hang bunches of dried herbs over your table for a savory, aromatic touch to the meal.
Set a row of fresh, potted herbs or wildflowers down the center of your table for a natural centerpiece.
Bunches of sunflowers would make a dramatic alternative floral arrangement.
Place bowls of olives around the table as both an additional decoration and a tasty nibble.
There's no need to pull out the fancy wine glasses. Use short juice tumblers to serve wine(grape juice, apple juice in Martinelli's bottle) the rustic Italian way.
Play classic Italian songs in the background.
Present your guests with small bottles of olive oil and balsamic vinegar as a party favor.