I can see a fair case for both. My strat with Italy is to focus on the Balkans and keep my fleet in the eastern Med, away from the British in the Atlantic and close enough to redeploy to Egypt/mid-east should I need to. I would prefer the Germans to have southern France just so they have an easy jumping point and because, with the larger income, can more easily afford to build fleets there as nesscary.
@jeffdestroyer:
My concern is having to defend another factory in S. France from the U.S.A. ie from a Gibraltar attack.
Remember, with the fighter stacks I mentioned and the Tac bomber firebrigade, you could easily counter attack and destroy any invasion in that area