Tough choice. I've stayed at both several times and I like them both very much. The Palace is more regal for sure and it has a lot of history. There are some great restaurants within walking distance including the fabulous and romantic Paradis.

The area around LM Barca isn't that great, but you can take a short taxi trip to some excellent restaurants, the local "mountain" and the waterside village. Depending on the time of year, you may want Barca for the weather.