1) The areas wouldn't be "occupied" if the surrounding countries had not attacked Israel in 1967. They lost the war and they shouldn't be whining about the land. Do you honestly think that Syria would be rushing to give land back to Israel if the 1967 war would have turned out differently. Hell, no!
2) The Isrealis are happy to let the Palestinians live in peace. It's the Palestinians who refuse to be peaceful. Don't forget that Jordan kicked out Arafat and the Palestinians in 1970 for trying to foment a revolution there.
3) It's a total myth is that the Arabs who now call themselves "Palestinians" were long established in what is now Israel until the Jews came and "displaced" them. Actually, Arab immigration into present-day Israel displaced the Jews.