Here is something that I bet very few people know: Before the 1967 war, Gaza was not part of Israel; it was part of Egypt. In 1967, when Israel seized the Sinai peninsula, Gaza was part of the package. Here is a map showing the territories which Israel ended up with:
Funny, isn't it, that when Arab countries demand the return of all land that Israel ended up with as a result of the 1967 war, Gaza is never part of the package.
Well, here is my answer to the Gaza problem: Egypt must agree to reintegrate Gaza into its territory and take responsibility for the acts of its people, who are in reality Egyptian citizens; and in return, Israel will allow Palestinians to establish a government in East Jerusalem. This should be a part of any peace proposal. It will solve two problems at the same time, giving each side a real victory without significant damage to the other side, and provide Palestinians and Israelis alike a clear sign that there are those on both sides who will take the actions necessary to make the peace process a true possibility. Return Gaza to Egypt- a real way forward.
Update: At my wife's suggestion, I have added some labels to the map, to make it clearer what is what.