Even though it's expensive, even though it's completely touristy, I can't imagine not taking a trip down a quiet canal in a gondola when visiting Venice. 
It's a magical experience, especially in the evening when the moon is shining above...
For everything you ever wanted to know about the Venetian gondolas, check out Gondolas: Its History, a fascinating website, with lots of information and pictures and links to other sites about Venice.
Also, here's a link to a story from the NY Times, On the Canals, A Woman Paddles Against the Tide, about the only female gondoliera. It's almost inconceivable that she was able to break this gender barrier!
Many guide books will encourage you to save money and skip the gondola ride, suggesting that the trip along the Grand Canal in the noisy vaporetto (water bus) is comparable. But it is not. The vaporetti are great for getting around Venice when your feet are tired, and it's defintely worth riding one for the whole length of the bustling Grand Canal. In fact, it's the very best way for seeing the palazzos that line the famous waterway, an absolute Venetian must-do.
But there is nothing like seeing Venice the way its people have done for centuries, down close to the water, in a beautiful, slient, black gondola through the small canals that flow through this special place.
