Penalties are fun, but they fly in the face of the spirit of the game imo.
I thought the result against Italy worked out for the best. England were great for the first 20 minutes or so, but for most of the game Italy were the better side and I couldn't have imagined England being an opposition for Germany on that basis.
However, now having seen Germany fall apart against Italy I'm not so sure. Maybe if England had beaten Italy they would have got through Germany just as easily and gone onto the final.