In many ways, it depends on the sources. Gregory the Great paints a bleak, apocalyptic view of post-Roman Italy. There was certainly a decline, as Italy had been the center of the Roman world, but there were positive changes as well. Italy was under significant population pressure in the preceding centuries of Roman rule; by the 6th century, much of that pressure had been alleviated. The population dropped considerably during this time, by as much as 25-30% (Lo Cascio and Malanima, 2005); although that is a depressing statistic, it means the standards of living for those that survived increased. Additionally, with the disappearance of Roman rule, the aristocracy and bureaucracy likewise disappeared, meaning that the poorest farmers (who would eventually become peasants) saw a relative upswing in their living conditions. Life became more rural in nature, with the abandonment of the mega-cities of Roman times, but diets also became more varied, society became more egalitarian, and tax burdens were alleviated. (Barbiera and Dalla-Zuanna, Population Dynamics in Italy in the Middle Ages, 2009).

So it's a bit of a mixed bag. Life in Roman Italy (especially Rome) was not all roses and cheer; overpopulation led to considerable economic and health strain. Disease outbreaks and squalid living conditions weren't uncommon, especially for the poor. With the disappearance of Roman authority, there was a sizable population decline -- in blunt terms, a lot of people died. But that level of population was unsustainable in the first place, and for those that survived, living conditions fundamentally changed. But not necessarily in a bad way -- in fact, it can be argued that for the non-aristocracy that survived, their actual living conditions improved.

Politically, things remained in a flux until the 7th century. Roman rule didn't necessarily disappear over night; it faded away. People in these times did not think of empires and nations in the same light we do; instead, they viewed the Ostrogoths as another ruler in the long line of previous rulers of Italy. The Ostrogoths did not rule long enough to really cement their legacy on the region's politics and ethnic makeup/culture. Interestingly enough, the Roman senate continued to survive as an institution well into the 6th century, and wielded considerable authority in tandem with the Ostrogothic rulers. But, in many ways, Italy remained a sort of Ostrogothic-Roman hybrid until the year 600 CE; by then, rather depressingly, very few Ostrogoths and Romans actually remained in Italy. (Amory, People and Identity in Ostrogothic Italy, 1999).

It was the Byzantine wars in Italy that really shook the region up, and not in a good way; the destruction these wars caused erased any lingering remnants of Roman society in Italy.