jessie526,Welcome to the Boards! I have a few initial comments on your proposed Itinerary.
As this is your first trip to Europe, I'd highly recommend pre-reading the Guidebook
Europe Through The Back Door. It will provide you with a LOT of information to help you travel "well" in Europe. Pay special attention to the "Rail Skills" chapter.
You might also have a look at some country-specific Guidebooks for the locations you want to visit. They will provide lots of sightseeing ideas as well as lodgings, etc. If you have a PBS TV station in your area, check local listings to find out if they air the show
Travels in Europe. The TV programs might give you some ideas on places that might interest you.
Most of your destinations look good. However, you might want to have a closer look at :
> Milan - is there a specific reason you want to visit here (ie: The Last Supper).
> Cannes - you might consider Nice instead. IMO, Cannes is not as good a destination for tourists. Nice has some great Museums, a somewhat rocky beach and a great "old city" centre with street markets and restaurants. It's also an easy day trip to reach Monaco and Monte Carlo.
> Marseille - this is a large city and IMO not as good as a "tourist destination". You could consider Arles or other cities in the area instead.
> Champagne - is there a reason for visiting there?
As usual, I'd suggest using open jaw flights for best efficiency. You could (for example) start in Barcelona, make a "loop" and then return home from Paris. You didn't indicate where you're flying from, but it shouldn't be difficult to book open jaw flights.
Be sure to allow adequate time for transportation between cities. In some cases this will only be a few hours, but in other cases it may take the better part of a day. Using budget airlines will no doubt be necessary in some cases, and you'll want to book those early as they often use a "sliding scale", with the prices increasing as the flight fills up.
As you're planning to stay exclusively in Hostels, you might consider taking out a membership in
Hostelling International. They have Hostels in most places in Europe and I've found that because they're a "chain", the facilities tend to be somewhat consistent from one location to another. Have a look at
www.hihostels.com/ for more information. Those with a membership get preferred booking over non-members and also slightly better prices.
Hopefully the others will have some comments as well.
Good luck with your planning!