I am using my Palio for around 2 years and here are my thoughts.
This is a great car with good value for money. The car costs around 4 lakhs but if you compare other cars with that price you get many things. For example, it has good space. The space is compared with larger car in that range. In many other cars, when you are in front seat, the gear handle always touches to your legs while changing the gears. Not such case with Palio. It is very wide and have good leg room. It also offers tubeless tires, independant supension, dead padle(useful on highway and when you stop at signals)
The ride quality and handling is the best part in this car. Fiat has neatly balenced ride quality with handling. The bad road doesnt feel much and there is very limited body roll on turning. The suspensions are just great. The steering is little tight but you know exactly whats going on in each wheel.
Palio is real highway queen. Its stable at all the speed and great car. The high speed stability is excellent
Palio 1.1 Power: I dont know why people(and reviews) say that the Palio 1.1 is under powered. Well. you cannt compare that with Palio 1.6 or higher range cars(like swift). But honestly I think Palio has exactly enough power. It keeps up with city traffic and on highway. My experience is I am able to drive the car at constantly around 110/120 KMPH without any trouble on highway. I did 130+ but very rare. I think 100/110 is sufficient speed on Indian roads and I am talking about NH4 which is very decent road. So do you really need to go for car that has top speed of 160+. Atleast I dont think so. The indian roads are not designed and managed for that speed. 100 kmph is very enough on highway. on the interior roads, 50 to 60 KMPH is good enough. Then why do we need power infact less power means more fuel efficiency. It has excellent handling and balance and great composure on high speed. It has a great suspension setup.
I get 14 to 15 km per lit in city with AC(occasionally). On highway I get 17/18 km/lt. I think for that size(weight) its good efficiency.
The main cons is service. Although, I get decent service everytime, there are issues sometimes with the spares. Other thing I did not liked about it is the turning radius. It has more turning radius than other. Which makes difficult while parking. But once you are use to it, its fine
I think overall, Palio is a good value for money.