Laguna Palace was the nicest hotel we stayed in our 3 week trip to Italy, in terms of facilities and food. The room has good amenities, high tech/modern, and clean. The toiletries provided was consistently with a 4 star hotel here in the US.
The breakfast is outside in a patio area near the boat slips. The food provided has the best selection that I've seen - fruit, great sausages (not like the familiar American breakfast sausages), eggs, cold cut, rolls, croissants, yogurt and even liver pate (the little tins with German labels)!
Now the catch is the location. Mestre may not be bad for a tour group, since it's only a 10-15 minute bus ride over to Piazza Roma, but I think by staying here one really misses out on the experience to immense in the fantasyland that's Venice. Besides, the nicest thing about Venice is its lack of cars and the ability to go everywhere by foot or water bus.
I don't think the price is that much cheaper than staying at a 3 star B&B in Venice. As a matter of fact it was 10 euros more per night than the B&B we later on stayed in that was 5 minutes from San Marco Plaza.
I didn't find the hotel staff rude. Just a little standoffish and not particularly service oriented. We checked in late and stumbled onto building B by mistake, at which point we were told to go to building A, as all the facilities, including check in, is separate. No help whatsoever in getting the luggage over. Now the catch is to get from one building to another you have to exit the building, walk along the outside perimeter, and enter the other building. None of this building A and B delineation was clearly marked on the outside, at least none was visible in the dark.
So in sum I think this is a great place if it's included as part of a tour group package, or if one is on the way to/from the airport. Otherwise I think for independent travelers I would advise staying in a B&B with less amenities for about the same price at Venice proper instead.