I highly recommend staying with Margherita. Her apartment is comfortable and spacious. It is very central; a 3 minute walk from the central train and bus stations, and in the old part of the city which means you can explore on foot. A large food market (open daily) and a good sized supermarket are a minute away, and there are plenty of places to eat at nearby. My room was large, bright and spotlessly clean. Margerita is an excellent host and is generous with her time providing information about Palermo and Sicily. I had a very enjoyable stay in Palermo.