Why not just rough house with her a little bit, instead of reacting with a "timeout"?
Show her who's boss!
Show her how slow/clumsy she is, lead her with one hand then gently push her off balance with the other hand so she falls on her side (no pinning).
Make sure your saying how slow she is when she can't catch your hand ("Ha!!! too slow!) and how clumsy she is when she falls over ("Get up clumsy!), keep your energy high.
Show her how little stamina she has, wear her little behind out, lead her from one hand to the other by hiding your hand whenever she gets close to one, and ambush her with the other hand over and over. She will get tired. Put gloves on so you don't have to "yelp" while she is in this mode, don't react if you get bit just keep playing, I doubt the "yelping" helps when she's in "hyde" mode anyway. Say things like "is that all you got?" Keep your energy up!
Try to remember being a kid and rough housing with your siblings/father/uncles/cousins/friends... Don't let the puppy aggravate you, she's just a baby, with sharp teeth. You stated that her tail is wagging the entire time, until you pick her up (like others have said use a leash), so keep that tail wagging and play with her, even if it's "rough".
Once she's plops from exhaustion, then break out some water, make sure it's not enough water though, so that she'll want more, and keep adding little bits at a time. This is when you switch to the "sweet voice"..."Awww are you thirsty?" "Here's some water ______"... then take her for a nap. She'll sleep like what she is...a baby =)
All JMO... and YMMV.
Barack Green GSD 8-25-2012 AKC reg 12-8-2012