Palio is definitely the best deal in present mid size car market. you get all the goodies of any luxury car in the price of a mid-size car viz. space, comfort, looks, fun in driving. As far as mileage and service is concern, no car in mid-size segment will give you more that 12kmpl in city and 15-16 kmpl outside.... I am getting 10-11 kmpl in city from my palio ELX, thats pretty ok. Though service is not up to mark but its improving ... At least I never had any problems with it for last 1 year since I bought my car.
Having a good pick up helps you to zooom away nicely. I have taken test drive of every other car... santro, wagonr, zen ... but with Palio its far better driving experience which you can match with bigger cars like ikon... If you ask me I would suggest to -
Go for it ... !!!