Without doubt the biggest story to come out of CES was from Palm (NSDQ: PALM), with its new OS and its new handset Pre. Everyone was paying attention: Even those who doubted Palm would release anything good knew that if it didn’t, the company would effectively be finished. There is a rumor flying around that the handset will be $399 with a 2-year contract with Sprint (NYSE: S) (Mobile Burn), although obviously that’s not confirmed. Palm has said the cost will be competitive, but CEO Ed Colligan replied to a question from All Things Digital about whether then device would cost less than the iPhone’s $199, by saying: “Why would we do that when we have a significantly better product?” There will also be a GSM/UMTS model announced in the next few months.

In general, Palm (and its backers) must be pleased with the response—accolades are everywhere and the share price jumped by a third. Tricia said she was most impressed with how easy it is to find things on the handset and the web. Here are some of the main responses:

—Engadget: The Palm Pre got a big thumbs up from Engadget, for example: “The UI outclasses most of its competition on a number of levels, and actually may be quite a bit more revolutionary than the iPhone.” That’s high praise.

—Gizmodo: To avoid any doubt Gizmodo titled its preview article Simply Amazing. Every aspect gets a good review except the overall design, which is a personal preference thing. And this line at the bottom: “It transcends what a mobile device should feel like.” There are also some video tours.

—GigaOM: There was at least one bad report, with Om Malik slamming the device as “woefully behind the curve” and dismissing most of the features as currently available on other smartphones. I reckon Palm is on the crest of the curve, but agree with Om that if the “first half 09” release date is more than a few months in it’s going to lose its shine. He also doubted the ability of Palm to attract developers.

—NYT Bits: Developers were also the focus of this Bits interview with Palm executive chairman Jon Rubinstein, recognized the importance of developers. “There’s a large, very loyal Palm developer base,” he said. The key to success is “you reinvigorate those developers.” He declined to provide details of Palm’s efforts to court programmers, saying the company was focused on getting the Pre introduced in the first half of this year.”

—Mobile Crunch: I think MobileCrunch used the fewest adjectives in its review, with the most forceful comment being that the UI is “straight up gorgeous”, before warning that there are some bugs that need to be sorted out before the handset goes live.

The general consensus is that it’s a great handset with a great OS and a good opportunity with developers…if they’re interested. However, I remember checking out the Sony (NYSE: SNE) Ericsson (NSDQ: ERIC) P800 when I first started as a tech journo, which was mind-blowingly advanced when it was first demo’d and overpriced and under-featured when it finally it the stores around a year later. If Palm wants to convert the hype into a hit product time is of the essence.