The Palestinian point of view
Well, so far I found out there is a difference between the Palestinians that have Israeli citizenship and the ones in the Palestinian territories. The Israeli arabs are well integrated into Israelian culture and can even do miliraty service if they want (it's not compulsory for them). They feel Israeli.
I have also been explained another difference: The jihad is not terrorism. The jihad here is perceived as the resistance movement against Israeli occupation. They disrupt IDF infrastructure and occasionally fight battles against the IDF with assault rifles and RPGs (which is suicidal in my opinion).
Unsurprisingly the settlers seem to be real bastards. The trouble is that there are many loopholes in the legislation for Israelis to exploit and settle in the West Bank. And once they are inside the West Bank the Israeli state is bound by law to protect them by sending in military forces. They seem to send one soldier per settler as a rule of thumb (imagine the costs of this operation!). The problem then is that the soldiers are required to protect the settlers, but do not take care of the Palestinians. Thus the settlers can mob the Palestinians away in all impunity, but as soon as the Palestinians try to defend themselves the soldiers are stepping in.
Ok, I'm in Nablus now and I'm starting to understand why the Palestinians are so angry.
One problem is that the Jews didn't just come and conquer a chunk of Palestinian land. They want it all. There's a huge number of Jewish settlements all over the occupied territories (they seem to have a predilection for hill tops). Here's a map of the occupied territories. Look at all the Jewish settlements, they are everywhere!
Most of the settlers are here for economic reasons. They get big tax cuts and a lot of help from the Israeli government. But some are Jewish fundamentalists that abuse the protection they are given by the IDF to terrorize the Palestinians (they beat them up real bad, they poison the sheep herds, they poison the water wells, they shoot the Palestinians with steel core - rubber bullets). Why the Israeli government encourages these settlements is a mystery to me. It seems to bring only trouble and must be a huge drain on the budget.
The other problem is the fact that Israel controls pretty much everything in the West Bank, from water supplies to traffic. There are checkpoints on every road in the West Bank and the Israelis don't let easily people out of their city. They have also almost closed the northern border with Israel, thus isolating the northern part of the West Bank. All these movement restrictions have of course crippled trade and the local economy, but also health and support to the needy (ambulances are also subject to security restrictions). They also randomly close schools and universities for weeks or months. After the second intifada all schools and universities in the West Bank were closed for one year! As a direct result young Palestinians speak English rather poorly, which makes communication difficult.
Here's an interesting site:
It gives a refreshingly honest look on Israeli activities in occupied territories. Interestingly it is run by ex-IDF soldiers that are disgusted by what they had to do during their military service.