How much time/effort should I put into writing a reference letter for an application for a Master's program?
Should I feel bad if I send her a quick and simple letter?


Yes. I cannot stress enough how much this can hurt your student. 
I once had a professor agree to write a letter for me, and I learned afterwards that he wrote "Kerkyra was an intern in my lab for 6 months. She's great, she got along well with everyone and did a good job." (I'm almost not exaggerating.) This basically reads as "This person worked with me for 6 months and all I have to say about her is that she's a nice girl", which is terrible.

Which brings me to your main question:


  How much time/effort should I put into writing a reference letter for this former student's application for a Master's program?


You should spend the time/effort that you feel like spending. 

If you remember the student and have something to say about her that you feel could help her application (Did she stand out in some way during your course? Did she perform particularly well, or ask interesting questions?), it's nice to do it. It does not necessarily take long to write an enthusiastic letter.

If you don't remember her, or if she was an average student, it's perfectly okay to tell her that you don't know her or her work that well, and don't feel that you could write a helpful recommendation under these circumstances. Since her recommendation letter is optional, no letter is way better than a lukewarm or empty one.