I just would tell the truth. Sit down with her and tell her short and to the point how you feel. Tell her to pretend otherwise would be dishonest to her and your own feelings. She is entitled to know imidiately how you feel about her. Straight, to the point but not harsh. Doing things like breaking up by phone or e-mail only hurts her more. Besides it would be really chicken of you wouldn't it?
Honesty worked for me, one girl turned into a good friend and we go out now and then with her new BF and other friends. No hard feelings. Another I see regularly and we're on friendly terms. Another moved away. Anyway, none are hostile. They deserve respect and dignity eventhough they weren't who I thought they were. Don't treat her like shit, unless she really did something nasty to you...
Greven