Here is a very good article laying out the tough choice facing European policy makers: Dan O'Brien's article in the Irish Times, see here.
What are the choices? One, Europe could become more integrated, which would allow a central finance authority to backstop the debt of the close-to-default nations -- Greece, Ireland, Portugal -- as well as the larger countries of Italy and Spain which are also showing fault lines.
Or Europe could disintegrate. Another interesting idea, see here, is that Germany and a few related countries would be the ones to leave the Euro. Interesting -- leave Greece and others to wallow in the Euro, but at least they don't have to rewrite all contracts. It probably is true that it would be easier for the stronger set of countries to leave the Euro (back to the DM?!) than for the weaker.
The problem with increased integration, as I see it, is that increased economic integration requires more political integration. Look at what the Greeks and others did when they could borrow in euros, even when they ostensibly had to pay back the debt themselves. What would happen if they could borrow in euros and have the debt be every European country's responsibility? Talk about a major free-rider problem. But how can all the countries of Europe give up their rights to determine their own levels of spending and taxation? And to the Germans?
I guess the third choice is to try and ride out the storm. Batten down the hatches, tie the rudder, furl the sails and hope that the boat doesn't founder.