Check out this interview Palin did with C-SPAN back in February:
While I wouldn't go so far as to call her responses eloquent, they were certainly competent. You get the impression that she knows what she's talking about. She doesn't stumble over words or phrases. She makes her point succinctly and reasonably clearly. See also here and here.
Now, it's possible that she has the same weird affliction that George W. Bush has, where he was a reasonably skilled public speaker as governor but mangles sentences on the national stage. But it's also possible that she's been running the most intricate and brilliant game of expectations-lowering that we've ever seen.
Either way, the debate is likely to be a disappointment for Democrats. The debate format is pretty rigid -- they'll be answering Gwen Ifill's questions directly, and chances are they have a pretty good idea what she'll be asking. There won't be much interaction between the candidates. And Palin is likely to be pretty well rehearsed.