My wife and I stayed at Cafe Blue Hotel at Palolem Beach and recommend it highly, with one caveat. We had a balcony directly overlooking the ocean (beautiful), and once the restaurant closed at 10:30, the waves lulled us to sleep. The one caution is that the room is quite basic. It has everything you need, but if you are looking for 5-star luxury, this isn't it. What it does offer is a 5-star beach location. The a/c works fine, there is a shower and bathroom, and the bed is comfortable. The restaurant is excellent, particularly the whole grilled fish. Breakfast is good, although it is not all you can eat. The staff is very helpful.
Cafe Blue Hotel is on the quieter (north) side of the beach. The beach itself is developed, so there are small restaurants and hotels lining its shores. There are a bunch of colorful, small fishing boats on the beach, which you can hire to see dolphins, the sunset, or to go to another beach. Some of them do catch fish too. We hired Dev's boat. The small river on the north end of the beach is also good for a sunrise boat trip to see amazing birds, including Indian eagles. "Mr. Big" found us near the bridge and poled us up river in his boat.
The ocean waters are calm, warm, family-friendly, and the beach is not overcrowded. There is a street that leads up to the beach, and it is lined with stores. You can buy food, drinks, clothing, jewelry, leather (water buffalo, not cow), sheets, wall hangings, and various other goods.