Unfortunately, there is no solution which is going to appease everyone; however, the Palestinians need to step up to their agreement to stop terror. Israeli action in Palestinian land is done in reaction to Palestinian terror, which has ebbed and flowed throughout the past 50 years. While a large percentage of the Palestinians (I don't know exact numbers, so bug off) are peaceful and agreable, unfortunately quite a percentage still hail Arafat as a "hero," instead of the terrorist he is. Let us not forget the original goals of the PLO, which were akin to those of Hamas.
Of course, the problem is not only perpetuated by the Palestinians, but the lack of compromise on the Palestinians' part is leading the Middle East further down the road of violence. It is unfortunate, but the fact remains that the Palestinians, in their current state, pose serious and fatal threats to the well-being of Israeli citizens, AND to the needs of peaceful Palestinian citizens.
Personally, I am for the formation of a sovereign Palestinian state, but not at the expense of Israeli's freedom and safety. By stringing along the Israelis during so called "peace talks," only to bombard Israel with suicide bombers, the Palestinians in control are creating an unfair future for the Palestinians who desire peace and compromise. Israel has been put in a situation where it is forced to fend for itself. Since the Palestinians are unwilling to compromise, Israel should (and is) do what it needs to ensure its safety.