Great news: As of July 2014 there’s no need to apply for a separate Visa for Croatia if you have a valid Schengen Visa.
In a step on the way to full Schengen Area integration (which is targeted for 2016) the Croatian government decided with immediate effect on July 22 2014 to accept valid Schengen Visas for entry to Croatia under the same conditions.
The official Visa requirements page from the Croatian Ministry of Foreign and European Affairs puts it like this:
Pursuant to the Government’s Decision, starting with 22 July 2014, the Republic of Croatia applies the Decision No 565/2014/EU. All aliens who are holders of valid Schengen documents, as well as national visas and residence permits of Bulgaria, Cyprus, and Romania do not require an additional (Croatian) visa for Croatia.
Great news if you’re from a country that requires a Schengen Visa to visit Europe, less paperwork to fill out and one more reason to include some time in Croatia in a larger European trip.