Palin has clearly captured the imagination of the media and of lots of women. I hate to say it, Karl Rove may be right, it's about personal narrative more than anything else. The Obama campaign needs to respond with a way that captures women women's hearts and minds and puts a dent in the Palin bs.  Here's what you need to do:
Put together a listening/town hall type WOMEN's tour in at least 20 major cities and rural. Invite women to come see Michelle Obama, Hillary, Caroline Kennedy, Maria Shriver and other women who support Obama. This lineup MUST also include women who are "celebrities" in that particular town. Each appearance on this tour will be slightly different. The whole shebang (yes, pun intended) will be moderated by none other than OPRAH. It should be produced similar to Oprah's talk show, with some pre-taped segments, audience participation, etc. The theme: Women's stories, Women's values: Obama NOW.The town hall will sell Obama to women and empower them to change their communities. Think of this event as Mary Kay/Avon politics. The women at this event will then go and share what they found at other events. This event can teach them how to reach out with their OWN women's events.
Other details:Invite local media and push this on the local level.Obama himself should make a surprise appearance on at least SOME of these events (to build up excitement of "will Obama be there"? he pop's in and then pops out quickly, just as happens often with celebs on Oprah's show)There should be DAYCARE at the event, either free or "pay what you can", a goody bag with bumper stickers and Obama lipstick wouldn't hurt either.
Trust me, if you do this THEY WILL COME. This will generate a ton of press. Oprah and her crew have all the resources to make it happen. Put the word out there and plenty of other people can help out. 

Lots of you have noted that Joe Biden will have to tread lightly when it comes to Palin. You're right. He can't come off as bulldozing a young, attractive [rolling my eyes] woman.
This is a job for Hillary Clinton. Nobody can attack a woman better than another woman. Hillary should start sharpening her claws today and get right to it with the bitch slaps.  Keep the election momentum going.  Mark my words: Hillary will come off as the hero of this election by the time all of this is over.
Meanwhile, change of plans for Joe. Forget about attacking McCain's VP choice. Keep attacking McCain and Bush.
A few things to think about: 
Palin is a former beauty queen who ran for Miss Alaska. As the resident television producer in my household said this morning: This means there have to be photos of her in a bathing suit and high heels somewhere! 

Palin admits to having smoked pot while it was legal in Alaska. Evangelicals are against pot smoking not because it's illegal but because they think it's immoral. I predict before this thing is over, Palin will have to admit she "sinned" when she smoked pot.
Palin, who is firmly "pro-life," has a baby boy with Down's Syndrome who is just months old. This means she actually had to make a very personal choice about having an abortion. (If she got proper medical care, this was a choice she had to make in her first trimester.) This puts James Dobson-type Christianists in a tough position. They will want to support Palin even if they hate McCain. However, Palin's family situation does highlight the hypocrisy of the anti-choice GOP. They love the unborn, but after you pop them out it's time to hit the campaign trail!