And, as you start getting closer to your ideal saddle height, make smaller adjustments. Only move it that half inch, not a full inch, at least not yet. I can really feel the difference when I move mine just a centimeter too high.

Your hands may be hurting because of positioning, or it may be your gloves (if you have some; even then, it's personal preference), or it may be the grips.

I'm trying to get a good look at your grips (I think I see reflective end caps, too; that's kinda cool)... do they flare back with a sort of oblong shape? Try twisting them forward, bringing the flared part a bit upwards as shown in the diagrams here:
http://www.ergon-bike.com/en/grips/g...i8lmk6f63d8is0

I have a pair of those Ergon grips and really like them, but you can probably still get yours to work well with some tweaking.