This week, beginning Friday, Palermo celebrates its patron saint, Rosalie. The festival culminates Saturday at midnight with fireworks near the Mura delle Cattive (near Porta Felice and the Kalsa district) with the arrival of the St Rosalie float, but the stands will still be up through Tuesday, July 17th.
Sicily has a number of these religious festivals throughout the year, their size generally corresponding to their city's population. Palermo's is larger than Catania's - and generally crazier. Much as we enjoy these events, they are chaotic, crowded and not organized very well. Nevertheless, they're a great place to sample the local cuisine and get a taste of "popular" folk culture. (Enjoy your visit but beware of pickpockets.)
Otherwise, avoid the Via Crispi and Foro Italico area near the shore from the Cala (bay) to Via Lincoln, especially during the evenings.