Venice is an interesting place to visit, but you really don't need to stay for more than a day or 2 (One day for main island and then maybe another day to check out some of the surrounding islands). Apart from maybe Rome, it is probably the most touristy place that I visited.
Insider Tip:It is EXPENSIVE to eat (I paid 18 euro for an average spaghetti carbonara for lunch and this was probably the cheapest thing on the menu). Also often extra fees at the restaurants.
Also be aware that throughout Italy there are City taxes not included in the accommodation prices. This is anywhere between 50 Eurocents and 4 Euro's per night (I think it was 1 euro/night for Venice).
And yes, the water from the public fountains on the island is drinkable (at least I did it and didn't get sick).