While Palmer may not be the second coming of Joe Montana (since Brady is, but I digress) I think Palmer will be an adequate QB to keep them winning games and remaining competitive for the AFCW... Makes sense on one level for Oakland to do this. Yes, it's their first chance at a winning season - and they are in the hunt for their division - so why throw the opportunity away?
Will Palmer help them win the division, and make a deep playoff run? Maybe. But without an experienced starting QB, they stand no chance. At all.
I think they gave up too much for him, but then, who else is out there? Jamarcus Russell? Vince Young? Donovan McNabb shortly?
So, to sum up, this was probably the best option for them at this point in time, imho.