Unfortunately it looks like Palmer's confidence is completely shot
I think this is a big part of it. He came into the season with high hopes. The car is not great anyway and the reliability is poor as well. When he started getting hammered by his team mate his confidence just started to get lower than it already was.
He needs a few good results to build himself up again, although I don't like to knock any driver (he deserved his chance more than others; you don't win a GP2 championship without some skill) he seems out of his depth in F1 at the moment.
Unless he can save his F1 career and move into another team I would save all the millions he's wasting in sponsorship with Renault and move onto other things, he's doing something he loves but F1 is just not being kind to him at the moment.
As for a replacement? If I was Kubica I would stay away. If his goal is to win races, Renault are still years away from achieving that. If he's happy finishing top 10 and the team are happy to take the risk then go for it.
I suppose the whole "is GP2 a valid route into F1" argument will raise it's head again as well. There are some drivers who spend years in GP2 and never make it, being overlooked for drivers in GP3 or even lower categories.