The original post on this thread was the Italy was "too tough" not "too weak". Anyway, the last game I was a part of (the Feb Hartford game in the After Action Reports section) had Italy and the Italian fleet lasting until Spring 1944 - which I think is pretty good, considering some of the disasters the Axis had in the Med (like the failed invasion of Gibraltar). After dozens of games, I am not really of the opinion that Italy is too weak - if anything, perhaps the opposite.
Access through the Med can be blocked by sacrificing one destroyer if the Italians have to. By protecting the Italian fleet with some airpower flown down to the Med after the Fall of France, the Italian navy can be very threatening to the British.
I think the new optional Italian surrender rules add some additional flavor to the Italian role in the game as well.
With respect to Germany - this quote jumped out at me: "The german navy is negligable, some bombers will do the job, maybe an addition aircraft carrier in the north atlantic and some destroyers to hold the convoy routes just blockade the north atlantic to keep the axis from sending subs"
I think the German navy can be a pretty good threat to keep the British honest. building your fighters in the Ruhr will keep the British bombers away from your fleet - and if the British move too much away from the Atlantic to the Med or Pacific - sortie it.
I'd like to get some feedback from the guys in Detroit on this as it seems like the Germans have been creating a lot of havoc for the Allies in the Atlantic even with destroyer investment. If the British sail all their capital ships to the Med, I would definately commit the German navy to go kill some destroyers and loosen things up for my u-boats to do even more damage.