We just got back from Palau... we were on Peleliu most of the time, but did spend a few nights in Koror. The first night we stayed at the West Plaza By the Sea. The room was clean and highly air conditioned, but the services there seemed extremely minimal. We wouldn't have minded that part quite as much, but fresh off the plane, exhausted, arriving after everything is closed, we were not happy to find that we couldn't drink the water at the hotel and no one at the front desk could seem to tell us where to get a bottle of water, let alone a snack.
After our stay on Peleliu, we stayed at the Palau Pacific Resort, which is huge and beautiful and completely full-service, but is also the highest priced resort in Koror. PPR is also pretty far outside of town, and a round trip taxi will run you ~$10 ($7 one way).