Iran is clearly building nukes, and will succeed unless stopped.
That is what they want you to think!
I'm serious. They do want you to think that, just as Saddam wanted you to think he had nukes.
When analysing what countries have done and might do, you have to first look at the politicians who make the decisions. At the end of the day, this has nothing to do with religion or ethnicity: it is all about Power. IE in order to understand what a government is thinking, you must first understand the internal power struggles of that country.
Iran's ruling elite are currently in a state of civil war. The Right, which controls the government, currently has the upper hand, but only by a fragile margin. If the the Right withdraw on the one of their main principals, the principal that everyone is out to get them and that a strong military is needed for their protection, then that might just tilt the scales in the other direction. So to counter any possible suggestion that they are retreating on that principal, they are touting it louder: announcing 2nd reactor, missile tests, etc. I suspect the Right are also hoping that Israel will attack them, thus giving them the we-told-you-so card to play, but they won't attack first because that would tilt the scales the other way.
Israel currently is using the threat to attack Iran as a bargaining chip to keep the US off their back in regards to the settlements, which are needed as ammunition in their own internal power struggles. Attacking Iran would cause Israeli civilian casualties, because Iran will respond and large casualties from a war you started does not go down well at the polls.
President Obama currently lacks the ammunition to force Israel's hand, because all his political capital is caught up in the Health Care battle. Resorting to sanctions is probably a temporary measure until he has capital he needs to threaten Israel's funding.
Russia has its own internal struggles, which I won't go into in detail, but let me just say this: if you think Iran's government is in chaos, that is nothing compared to what is happening behind the scenes in Moscow.
In conclusion: Relax, there will be no war between Israel and Iran, because neither country wants to start one, but they both want everyone else to think they do due internal power struggles.
My prediction: In the long term the Iranian government will fall, the question is when. Sooner with sanctions, later without them. Russia is the key, China - the wild card.
PS You have to hand it to President Obama though. In just a few months his administration has managed to destroy most of the political power the Iranian Right spent decades building, they must really hate him now.