The Inter Rail Pass gets a lot of negative reviews due to restrictions in some countries and apparent better value point to point tickets. Personally I think those criticisms are unfair. Point to point tickets are usually only good value if you book your itinerary in advance and sacrifice flexibility. The pass is a fully flexible ticket (subject to reservation restrictions on some routes). Part of the fun is being able to take a journey on a whim and be able to change plans as and when required. I recommend Germany, Austria, Netherlands, Balkans, Belgium, Luxembourg, and Switzerland for very best value.
I purchased a 10 day in 22 1st Class pass in November 2011 for about £520. The price is pretty much still the same. I started at Hook of Holland and made my way down to Munich, then Venice. From Venice I went into Slovenia, Croatia, and eventually ended up in Sarajevo! I then 'cheated' flying to Zurich before taking what was (for me) one of the highlights, the Rail Jet from Zurich to Vienna (fantastic scenery). After Vienna I headed to Warsaw before flying back to London; however, the following weekend I resumed my exploration via Brussels, Cologne, Hamburg, then Luxembourg, returning to Brussels for the Eurostar where the adventure finally ended! It was an absolutely fantastic value trip enjoyed in relative comfort (except the journey from Zagreb to Sarajevo).
My tips are to buy an x in y days ticket and stick to those countries where acceptability is not complicated by costly reservations. Have some idea of where you are going but be flexible! Use the DB online timetable, this is absolutely invaluable. Also, you are not going to see all of Europe and have a few destinations where perhaps you want to stay two nights! For me that was Venice and Sarajevo!
Most of all enjoy!