The big problems faced by the Italians was very poor equipment and to little of it. There were times when the Germans had properly equipped a few battalions of Italian Soldiers that they put up a good fight. There were Italian Paratroopers that the Canadians ran into in Italy that gave a very account of them selfs. Also many Italians fought against the Germans and did a very good job. We have just buried a chap over here from the SAS who was carried by a couple of Italian women over the mountains on a journey of around forty miles so that he could get medical treatment for his battlefield injuries and with out their help he would have died on the battlefield, so running down a whole race of people for failures of a dictatorship is a bit over the top.
My Uncle Charlie who was in the LRDG mentioned that Italian gunners were very good as were their machine gunners. LeEnfield is right, not only did they had very poor equipment but they were also badly led.
As far as I am aware Italians invented or at the least used the "Human Torpedo," which as far as I am concerned took a lot of guts..
1 November 1918: Two men of the Regia Marina, Raffaele Paolucci and Raffaele Rossetti, in diving suits, rode a primitive manned torpedo (nicknamed Mignatta or "leech") into the Austro-Hungarian Navy base at Pola (Istria), where they sank the Austrian battleship Viribus Unitis and the freighter Wien using limpet mines. They had no breathing sets and they had to keep their heads above water, and thus they were discovered and taken prisoner.
1938: In Italy the "1a Flottiglia Mezzi d'Assalto" (First Fleet Assault Vehicles) was formed as a result of the research and development efforts of two men - Major Teseo Tesei and Major Elios Toschi of the Italian Royal Navy. The pair resurrected the idea of Paolucci and Rossetti.
1940: Commander Moccagatta of the Italian Royal Navy reorganised the 1st Fleet Assault Vehicles into the Decima Flottiglia MAS (Tenth Light Flotilla of assault vehicles) or "X-MAS", under the command of Ernesto Forza. It secretly manufactured manned torpedoes and trained war frogmen, called nuotatori (Italian: "swimmers").
26 July 1941: An attack on Valletta Harbour ended in disaster for the X MAS and Major Teseo Tesei lost his life.
19 December 1941: The Decima Flottiglia MAS attacked the port of Alexandria with three maiali. The battleships HMS Valiant and Queen Elizabeth (and an 8,000-ton tanker) were sunk in shallow water putting them out of action for many months. Luigi Durand de la Penne and five other swimmers were taken prisoner. De la Penne was awarded the Gold Medal of Military Valor after the war.
The idea was even copied by the British.