The club developed a fantastic prospect in Palmer who was on the cusp of becoming a regular squad player. He would have got a fair bit of game time this season, but for whatever reason (I suspect his agent wanting a slice of the cake) HE chose to go. We got a good chunk of money for him, so it's no real loss financially.
Personally I think he may not have had the temperament to achieve his potential at City as I think he's got a lot of growing up to do. I'm not sure the bright lights of London are going to do anything to help him in that sense, but maybe he'll knuckle down and forge out a career at the top of the game, just not at City.