The problem right now is that the West Bank and Gaza are in a kind of limbo. They aren't part of Israel (so the inhabitants don't get any rights as citizens) and they aren't allowed to become a separate state (if they try they get bombed and 'settled' some more). So Israel should decide what it wants to do, not just keep killing civilians whenever some religious idiots decide to fire of more rockets.
If it wants the land ,it should give the inhabitants citizenships and enforce it's laws - not by bombing innocents but by actually occupying and policing everything.
If it does not want to do that it should get out of the area completely. Not just say that they left and leave the hundreds of miles of fences and checkpoints everywhere so the people can't even go to work without being harrased.