For most visitors I recommend renting a car. You will be able to see and do much more. Its an extra expense but a car will give you easy access to cheaper lodging and eating. The more expensive establishments tend to be close to the bustops and tourist centers.
Costa Rican traffic and roads is no big deal. If you are from a large North American city you should have no problems. I would avoid driving in San Jose. The traffic is awful and you can spend hours in traffic jams. If you insist on sightseeing in the city I would take the bus or hire a taxi.
Renting a car allows you to explore the road less traveled and see some decidedly non-touristy sights. I talk more about this at my self-hosted blog here.
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