I think you may be right about McCain not seeking reelection in 2012. That is why I believe it would be far better for him to pick Palin. Then the GOP would be positioned well to put the first woman in the oval ofice. Palin, as a sitting VP, would make a much more attractive candidate than Hillary will and there is a pretty good chance that if Obama loses this time around, Clinton will get the nod for the next run.
McCain Romney 08. Romney Palin 12. Palin- 16.