We spent two nights in Room 2 at Il Palazzetto, and it was wonderful. A bit more expensive than other options but Rome isn't cheap, and it was worth it to have a really spectacular end to our Italian vacation.
Check-in at the nearby Hassler was handled quickly and graciously, and we were escorted to our room while a bellman followed with our bags. There is also a reception desk on the ground floor of Il Palazzetto, staffed until 11 pm, where we could leave our room key when departing that way, as well as get help with dinner reservations, etc. although they don't handle cash or checkin/out there. Very friendly and personal service, since they are looking after only four rooms.
The room was gorgeous, with a view onto the Spanish Steps but very quiet. Great bed, walk-in closet with plenty of hangers and drawers, large bathroom with a tub and separate glass-doored shower, a decent hairdryer, and twice-daily maid service. We requested extra pillows and an iron/ironing board which were both supplied promptly.
Breakfast at the Hassler was good - in addition to the usual juices, yogurt, cereals, breads & pastries, and meats/cheeses, there was a nice assortment of sliced fresh fruit, eggs (soft-boiled and scrambled), bacon & sausage, and pancakes. Service here was efficient if impersonal.

Stayed here for four nights mid September. A boutique establishment comprising of only 4 bedrooms. We enjoyed a beautiful air conditioned room overlooking the Spanish Steps. The outside terrace was great for eating and drinking and a superb location to people watch.
Breakfast (inclusive in the room price) was taken at the nearby Hassler in a beautiful courtyard setting.
For a central location this place is hard to beat.

We stayed at the Il Palazzetto for two nights in August 2010.

The setting is amazing, and the room was great. The breakfast at the Hassler was fantastic. We and my fiance were extremely happy with our stay there.

We stayed at Il Palazzetto for the last 2 nights of a 2 1/2 week trip. On arrival we had stayed at the Splendide Royal up near the Borghese Gardens and wanted to experience a smaller property to see out our last days in Rome.

This property really is something VERY special. It's location right on the Spanish Steps is breath taking and there is nothing like watching the sun set from the roof terrace wine bar as tired and hot tourists navigate the steps! We stayed in Room 4 which is on the top floor and although it is incredibly close to the roof terrace bar the sound insulation is incredible!

To have the use of the facilities and concierge services at The Hassler was perfect and we were welcomed as if we were guests there. The breakfast was wonderful, note that a Continental breakfast is included in the room rate.

Our only gripe was the restaurant recommendation.When we arrived it held great promise as we were welcomed by walls lined with photos of famous celebrities who have dined there, so you'd think the food would be good right? WRONG! We had better meals at more local restaurants where we were the only non-Romans! We had said to the concierge that we wanted a really local place but sadly this was very over priced for below average food. On our last night we enjoyed a delicious meal on a roof terrace surrounded by locals and didn't want to leave!

Il Palazzetto is wonderfully located for walking the length and breadth of Rome and with it's links to The Hassler, you really can't go wrong!