Actually the Palace is excellent and one of the 10 best hotels in the US; but not to everyone's taste. It was built post-gold rush to be the most expensive and opulent hotel in the world, hence the gorgeous Tiffany ceiling in their lobby restaurant (this space was originally the courtyard entrance to the hotel). Renovated in the 1980s by Japanese owners at a huge cost (something over $100 million), it has the best swimming pool and the best Japanese restaurant in SF. Some of the rooms are lavish, others are much worse (these old hotels believed in a social hierarchy and room size was related to status, unlike modern hotels where rooms are mostly alike). This explains the wide diversity of opinion about the Palace.

The 2 best hotels in SF are the Palace and the Clift; next are the Ritz Carlton if you stay on their club level, and the Park Hyatt. W is also quite good. Finally if you want a quiet hotel with great service, try the Pan Pacific, it over-achieves.