just back from the palazzo as a standard ambassador, not royal. We didn't find the VIP room, but when you are reading reviews, be careful not to confuse with the Prestige lounge as I don't think (but could be wrong), that the royal ambassador won't get you into the prestige lounge (23rd floor). The prestige lounge was very nice since we got a great deal with it included but I don't think I would pay the usual price to upgrade to it.
Also, we found the waitress service in both Palazzo and Venetian to be very very slow when playing the slots, especially when compared to the Wynn next door where we had to occasionally send the waitress away for coming back too soon ! If you are looking for some sun, the majority of the Palazzo pool doesn't get it until 12.30 / 13.00 and the little bit that does gets full very quickly (by about 0930)