both, since politically they basically side together and are treated the same by da jews.  If they vote and feel the same, then I might as well lump them together.

you're talking about countries for palestinians...

I don't think there are many examples of countries split in half that actually work... the whole 2 government thing might be a blessing in disquise... like that they can do 2 states.... ironically, I think the one with acess to the sea is not gonna prosper much considering its regime....

then they would probably want to make it a separate country. 

israeli arabs have equal rights (and thats more rights than they would get in any other arab country)

That simply makes no sense. Just because it would have an Arab majority does not mean it would divert to some fanatical state. There have been millions of Arabs (Muslims/Christians) living in Israel since its creation, those Arabs don't rise up and cause any issues because they enjoy the life in Israel and its mostly equal freedoms. Also, Gaza would probably not get absorbed in the first place.

The nation exists, it would probably finally have a binding constitution and as long as it kept everything open and free for all, meaning some current laws would require changing, such as who can join military as well as being able to buy land anywhere, etc, then there would be no long term issues.

On paper means nothing when the government itself has extreme prejudice against arabs. They don't give enough support to arab settlements in Israel, among others things.

As a side note, Israeli Jews are extremely racist to Arabs:

In 2006, a research institute poll reported that 41% of Israelis were in favour of Arab-Israeli segregation, 40% believed "the state needs to support the emigration of Arab citizens", and 63% believed Arabs to be a "security and demographic threat" to Israel. The data went on to report more than two thirds would not want to live in the same building as an Arab, 36% believed Arab culture to be inferior, and 18% felt hatred when they heard Arabic spoken.

In 2007, the Association for Civil Rights in Israel released a report stating that the expression of anti-Arab views had doubled, and anti-Arab racist incidents had increased by 26%. The report quoted polls that suggested 50% of Jewish Israelis do not believe Arab citizens of Israel should have equal rights, 50% said they wanted the government to encourage Arab emigration from Israel, and 75% of Jewish youths said Arabs were less intelligent and less clean than Jews.

http://www.guardian.co.uk/world/2006/mar/24/israel

http://news.bbc.co.uk/2/hi/middle_east/7136068.stm

what would happen if israel layed down its weapons? thnk bout it

Israel does have a great many extremist views.  But it is naive to think that retreating to their pre 1967 borders would give them peace.  There are at least two nations (Syria and ESPECIALLY Iran) who have focused most of their foreign policy and internal legitimacy on the ultimate defeat of Israel and their American supporters.  

I think there are a lot of people in the Middle East that would think better of Israel if they withdrew, but a large number would simply see a weakened state with strategically weaker borders to attack.

Actually quite a few years ago all Arab countries put out a unified agreement that if Israel returned to the Green Line and allowed refugees back to their homes there would be full normalized peace in all categories. Israel refused.

Yes, I remember. 

And how honest do you believe the agreement was?  At the end of the day, whatever most of these regimes say to the West, they still stoke enormous Israel hate within their own populations.  It's gotten to the point that they'd struggle to convince their own people to make peace.

And again, Iran is not Arab.