It's not about Palin though... they could have any woman set up as the VP candidate and they'd be framing Obama for "smearing" her, attacking him as harshly as they have been since the conventions.
The fact of the matter is that Obama doesn't respond in a strong way to criticism from the right, his speech at the DNC wasn't all that great (at least not when it came to convincing skeptics that he was more than just a person who talked about "hope"), and the RNC stole the show right out from under him. That's the change you're seeing there... it's not about Palin's personality or charm or cuteness or whatever.
The republicans are playing the same games they always play by creating drama that isn't really there, the media is focusing on that drama like they always do and overshadowing the issues, and the dems are being as weak as ever. We just don't know how to win an election against these evil fucks.
And I really hope I'm wrong.