I stay at Palermo every time I'm in Barcelona. It's not for everyone -- note the several bad reviews in this forum. But if you need an inexpensive place and are concerned more about location than luxury, this is a good option.
Like many independent budget hostels and pensions in Europe, it's not up to the standards of Best Western or Holiday Inn. Every time I've stayed there, Palermo has been scrupulously clean, but it's not always perfectly maintained -- some amenities may have seen better days or they might not work. Rooms may be small or awkwardly arranged and might not have bathrooms. The desk staff may or may not speak English. So if these are show-stoppers for you, find somewhere else (but be prepared either to shell out more money, or to be significantly farther from the action, or both).
What I like about Palermo is that it's exactly in the heart of the Barri Gotic, on a pedestrian sidestreet with lots of nice shops and a cool little tapas bar below. Some of the rooms overlook the patio dining area of a cafe; some have a view of the belltower of a nearby church. You can also sneak out onto the roof to drink wine if you can slip by the door guard. Best of all, it's reasonably cheap.
Hope you find this helpful.