Picking Hillary would have hurt his message of change. Yes, Biden did not help with the change aspect, but he wasn't the GOP's villain for nearly 20 years at the time. Also, he helped with working class voters. I am surprised his tendency to speak off script did not cause more concern. He definitely helped him. The only negative about Biden in '08 was centered on his plagiarism and maybe being seen as dumb.
I also think that Obama wanted to pick someone old enough that they would not run in '16. I believe this was the unofficial olive branch to Hillary's camp. She won't get the VP slot, but she will have an open lane in 8 years. Obama could have picked other white midwestern senators (Tom Harkin had all of the pros of Biden without the gaffes. He also would not have likely run in '16).
