According to all dictionaries I can see and everyday use by native speakers, this is the correct way:
On the one hand, it's larger; on the other hand, it's more expensive.
What makes no sense to me instinctively is the use of the first the. What is the one hand? Shouldn't it be just one hand?
Is this a grammatically valid construct I just don't understand, or is it an idiom that has changed to improve the presentation of the comparison described? It arguably sounds better with the additional the.