your main problems here are final land configurations (there are some towns and settlements by israel in the west bank, so there will need to be some compensation/withdrawal of the land). and of course, jerusalem which israel wants as their capital in its entirety(although they have been willing to return parts to the PA) and PA wants all of east jerusalem as its capital (the part where jordan took in 48 and was taken by the israelis in 67)
Refugees (everyone who left israel and ALL their descendants are considered refugess...most places keep them in what are essentially welfare ghettos because they dont want to deal with them the way most countries would try to integrate refugees[dont even have rights and the UN supplies everything for them, even in the west bank]).
Security arrangments. The palestinians indoctrinate their children to want to kill jews and about how they are disgusting animals, so the hate isnt just going to disappear. (and yes, superchunk, there are settlers who do this too, but israel has good security forces). So israel wants limits on what the palestinians can have and regulation of the borders.
"I like my steaks how i like my women. Bloody and all over my face"
"Its like sex, but with a winner!"

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