Palazzio is centrally located on State Street so it can be quite busy on nights and weekends. The food is delicious - huge portions, quite flavorful and worth the wait. The garlic bread is very tasty (be warned, you might fill up on it before any food arrives). The service was very good, though has the expected "laid-back" Southern California feel. Our waitress was extremely friendly and nice.
Have I tasted better Italian? Yes... I'm from New York and have been to Italy several times. Have I found better Italian in SoCal? Nope. Palazzio is quite good and is busy for a reason. I would recommend and would visit again.