The most important reason is naturally that Palestine wants to be an independent state. I am all for the national self determination, how ever one defines the nation. But there are other reasons, reasons that would be beneficial for the whole world and humankind.
As it is now, there has never been an independent state of Palestine. This is the reason to why there are a number of UN security council resolutions concerning Israel but none concerning the state of Palestine. To remove this unbalance, we need to have an independent Palestine.
Israel must stop the violations of human rights and remove all the roadblocks and Jewish settlements inside Palestine, whether Palestine is independent or not. It might be easier for Israel to do, if it was compensated in other areas.
Of course, Palestine would have to follow the suit and remove all the Palestinian settlements inside Israel and give up all the demands to Israeli lands and "right to return".
That would solve the Palestinian refugee problem once and for all. UNRWA would not be needed anymore, which would save thousands of dollars of UN money, and the "Palestinian refugee camps" would be recognized as the villages, towns and cities they are.
As it is now, Israel is holding hundreds of Palestinians prisoners. Feeding and housing these people are costing a lot to the Israeli government. If Palestine was independent, they could just send these people home.
Of course, Palestine would need to send back the Israelis they are holding, among others Gilad Shalit. About 2/3 of Israelis think no price is too high to get him back home, so the Israeli government would win a huge political victory.
Also, if Israel releases the Palestinian prisoners as normal prisoner exchange between two independent states, it would not give the message to terrorists that it is a good idea to kidnap Israelis.
Domestic terrorism is quite different issue than foreign terrorism or acts of war between two independent states. If Palestine was an independent state, recognised by the world community, there would be different expectations and rules concerning Israel-Palestine relations. An independent Palestine would act as an automatic peace treaty, and every hostile act after that would be considered as initiating hostilities, not as act of self-defense. If Palestine was independent, every rocket, every bullet, even stones thrown over the border, would be acts of war, could be taken as declaration of war, which would give Israel right to defend itself. The same way, every Israeli transgression over the border would be act of war as well.
There is only one problem here. The UN partition plan as well as the pre-1967 borders are both unacceptable.
Whole Judea should belong to the Jews (by the "It's called PALESTINE" logic). (Judea's Northern border goes from Mediterranean to Jordan at Jerusalem's height). Gaza doesn't belong to Judea, as it is the original Philistea (Palestine). This way the Jews would get the control of their two holiest cities, Jerusalem and Hebron. The Muslims have Mecca and Medina, their Holiest cities, so it's just fair that the Jews have the Jewish Holiest cities.
This would not only give them the control of water, but a bigger and better land than what they would lose to Israel. The Southern areas of current West-Bank are mostly rocky mountains
As Galilee gives Israel more than half of its water, Israel should get a full control of Yarkon-Tanninim (Western Mountain Aquifer) and lower Jordan (lower Western Mountain Aquifer). Full control means in this case that the borders need to be drawn so the whole area where the aquifer lies belongs to respective countries, so that one country cannot deplete or destroy the water for the other. The Coastal Aquifer would be shared with Gaza, as it is today.
That would also obsolete Israel's water deal with Jordan, Syria and Palestine, and Jordan, Syria and Israel would need to negotiate with Palestinians about that issue. Sitting on the main water resources of the whole area would give Palestinians very good negotiation ground.
Now, I'm really worried about this, because the Palestinians haven't shown much ability of managing the scarce water resources they have - it has been more "this way it has always been done, even when there were 1/10 of people living in this area, and this is the way we will do it for ever more, even when we are slowly poisoning the water resources". If they follow that thinking, they will be sitting on poison in 10 years, in stead of something really valuable. But, who knows. The water resources of Levant are not enough for the population as it is, so we need to find ways of cleaning water in any case. We need desalination plants for Negev and Gaza, and find a way to adjust the Fremen water policies for the rest of Levant. (Fremens are the invented people from the desert planet Arrakis, from Frank Herbert's scifi classic The Dune. Their water policy involves circulating all water - including your urine, tears, sweat, saliva and the tiny amount of water in your breath.) Israelis are rather brilliant in finding solutions to problems of this kind, and if they lost the aquifers of Galilee, they would have to use this brilliance and the money given to them by USA to create water technology, not war technology.
Also, it would fall to Egypt to see Gazans get what they need, and Syria and Jordan to see Palestine gets what it needs, if Israel became an equal neighbor in stead of a suzerain "occupier". That would also make the wall acceptable in principle, as it would then be a "normal" border wall. One independent state has no obligations to allow the citizens of another independent state to cross the border to work or tend their lands. The wall needs to come down anyway, because it's in wrong place. If Israel gets the Western Mountain Aquifer as compensation for the loss of the rich water resources of Northern Israel - which they should - the wall would be in Israeli territory, and not on the border of Israel and Palestine.
Now, I don't think people are ready to look at Israel-Palestine from an intelligent point of view. There's too much emotions involved, and too many people use the situation as political game piece, totally in spite of all the misery caused by this. If people were just a little bit more interested in peace and development, life and the common good, in stead of history, Nazi "Greater Homeland" ideology, stubborn insisting of how things should be done (Come on! 1967 borders? I am a middle aged woman and I wasn't even born then. Neither was 2/3 of Palestinians.) in stead of trying to find totally new, better and more functional solutions, and mourning over past unjustices, whining and complaining, and demanding compensation for something that happened long ago.
If Shoah doesn't count, Nakba doesn't count either.
If Galut doesn't count, neither does al-Shatat.