That is the formally correct form.
However Sarah Palin is who she is as an individual. And "Sarah Palin" is pretty awesome, so I consider it an acceptable way of referencing to her.
But Mrs Palin (or Ms Palin) is an attempt to diminish her by giving her a title, but one which, although technically correct, is less exclusive than her actual achievement.
Right out is Joe the Hard-Coal Miner's "'Lieutenant Governor' Palin"