We drove around Sri Lanka over 4 weeks and loved it. We chose not to use a driver as we were spending a lot of time in each location and didn't need to be driven each day but we are experienced Drivers in Asian countries so don't attempt to drive yourself if you are only used to the freeways of the USA or Europe.Here are some tips:
You need an International drivers Licence and you will have to ring the AA of Sri Lanka in Colombo on 011 2421528 or 2446074 Open 8.30 - 16.30 Monday to Friday to obtain a free "rec ognition permit". You will have you papers checked by Police quite often when you are on the road.
Never overtake any vehicle( from a push bike to a stationary bus) near or on a pedestrian crossing - you will be picked up for this.
The roads are good everywhere except the Highlands, but be aware that pedestrians, push bikes, motor bikes, cars, buses, trucks, cows and goats are all on the road at the same time and most roads are single lane. Because of this you will average no more than about 30kms per hour and because high concentration levels are required I would recommend only driving for a maximum of 200kms per day, which will be a full days driving. Better to try to travel just 4 hours per day. In the highlands/ Tea Country, the roads are potholed and here you should do no more than 100kms per day as this may take you 5-6 hours, depending on the weather and road conditions. The A7 from Nuwara Eliya to Hatton should be avoided unless you have a 4WD - its not suitable for sedans. The A4 from Wellawaya to Haputale is drivable but very potholed, so for this reason I would avoid Haputale from the easterly direction.
Fill up with 95 Octane petrol when ever you see it available - many service stations don't have it, but your hire car will drive better for the 6 rupees a litre more it will cost you. There are very few working and correct air pressure gauges for the tyres, so check the tyre pressures when air is available. New Ceypetco Petrol stations have good gauges and toilets too.
A GPS with SL maps is essential.
We paid approx. US$30 /day for our Avis car and had good service from them, so this was a lot cheaper than Car and driver options, but cost should not be the reason for self driving.