I stayed at the Palace for 2 nights with my boyfriend. The location is amazing, we walked pretty much everywhere. The hotel itself is beautiful as well, and the rooms are comfortable. I've never stayed in a room that big in NYC before. The bed was amazing and we slept really well. I wasn't expecting that much since we did book the hotel on a discounted website, but even the view from our room was beautiful.
BUT... The check-in was not very efficient. The staff who was doing the check-in told us he couldn't upgrade us (we never asked) because the room was apparently worth $500/night. I don't need that information and I don't see why he thought it would be relevant to let us know. If you offer your room on a discount website, don't tell me it's worth $xxx/nightly. And, check-in should basically take 5 minutes, but it took about 15 minutes plus the waiting in line time. In the end, we got a higher floor room (without asking) which we appreciated.
The other problems is the WiFi cost ($16/day is too expensive, hotels really need to stop charging that much for internet). We did not use it for this reason.
I would still give it 5* and I will go back, but there is no way I'll pay $500/night for this hotel ;)