I'm surprised that "Obama should pick Hillary" discussion has been dying down when it's been there since he won the nomination. That's normally the type of stuff the media jumps for -- no one in the public has heard of anyone else.
If he hadn't put Hillary in as Secretary of State, I could see it, but it would be beyond silly for him to nominate her to the Supreme Court just now. If the vacancy had waited a couple more years, maybe then, but even then it would use up political capital better used elsewhere. 2015-2016 when Obama will be a lame duck (assuming he is reëlected.)