I originally saw this palette in Sephora several months ago, looked it over, and actually passed. Yes, passed. The colors looked a little muted to me. Also, I figured neutral palettes are a dime-a-dozen.
Well, after about 6 months and a buzz around this product so loud it's sparked eBay hikes like it's on the black market, I changed my tune. Slowly. At first, I began wondering what was so special about this palette. It's a mix of neutral shades, one dark, one blue-toned silver, some gold, and highlighting shades. That answers my own question: The composition of the palette is what's made it stand out in a market flooded with eyeshadow palettes. The assembly is smart; the packaging is eye-catching; the shadows themselves are beautiful (incandescent without being a bit sparkly) and can be mixed in a variety of ways to create both natural and dramatic looks.
I used the palette over the weekend while doing makeup on someone for pictures. What I loved was the versatility: I initially went for a natural look on her, then I built upon the colors using the darker shades for a dramatic eye. The palette fit the bill in both cases. The lighter browns like Naked and Buck could easily be duped. What I haven't yet seen from other brands are the textures and tones of Virgin, Half Baked, Sin, Sidecar, and Toasted. Virgin especially has a buttery undertone and looks gorgeous as a highlight color. That is what makes the palette so coveted, it's been described as the Tickle-Me-Elmo for women: Everyone wants one, and they're so hard to get now, there's a waiting list (and maybe some tears).
As for a downside, I've heard from one user it's easy to go through these shadows quickly. I haven't had the palette long enough to personally comment. Urban Decay recently increased the price by $2 to $48 and has replaced its dual-ended eyeliner with an eyeshadow brush.
Urban Decay Naked palette, natural look
UD Naked, dramatic look