Palin is first and foremost a social conservative; while she may be conservative on fiscal and foreign policy issues, it's obviously she's strongest on social issues. Our country has never elected a President (on either the left or right--at least in recent history) who's been most prominently known for his social positions, or who's put social issues at the forefront of his campaign. And younger voters are even more hesitant than older ones to support a candidate who's seen as socially divisive.
This isn't to say we need to nominate social liberals or even moderates (in fact, I think it's critical we remain socially conservative for the sake of the party coalition and the country), but we need to nominate candidates whose message is still focused on economic and national security issues. We need candidates who are strong enough on these issues that social moderates and liberals are willing to overlook their differences on social issues and nonetheless vote Republican.
You need to look at Pain’s RECORD. While she is clearly a social conservative, she is first and foremost a fiscal conservative. Not as mayor or governor has she ever introduced legislation on social issues, deeming them a “private matter,” and she has never made social issues a part of her platform. She has always emphasized fiscal and reform issues.
McCain had very weak credentials in the social conservative arena, hence his campaign used Palin’s social conservatism to his benefit and built it up into something it hasn’t really been in terms of her governance so far.
Palin is the reason I voted for McCain. I know many others just like me. I think she helped the ticket by bringing in conservatives who hate McCain more than she hurt it by driving away moderates who would’ve most likely gone for Obama anyway.
Oh, and I strongly disagree with your assertion that “younger voters are even more hesitant than older ones to support a candidate who’s seen as socially divisive.” That’s only true if the person in question is a right-winger. They’re very willing to support extreme social liberals.