Oh, and someone else posted here that the autopilot wouldn't allow maneuvers that crash the plane. This is not true. What happened in this case was that the autopilot's altitude was changed from 38,000 ft to 100 ft. The altitude at the Alps is 6,000 ft but this isn't programmed into the autopilot so the plane just continued descending and descending until it eventually crashed.
It's interesting for sure. You would have thought they'd have wondered what was going on because even on a normal flight you notice when it slowly starts to descend - you can just feel it and your ears always pop so I can't imagine what the effect of this speedy drop would have done but once they saw the terrain and the pilot banging on the door they would have quickly relaized what was going on. Descending so early in the flight would have been unexpected too.
Seeing the terrain come slowly closer and closer without some sort of obviously catastrophic plunge probably would have caused confusion among the passengers rather than panic. The A320 is a smaller plane but it's still fairly long (40m & 30 rows of seats). Those who were in the front of the plane probably realized what was going on while those who were closer to the rear were probably oblivious until the final moments before the crash.