As far as I'm concerned any land they occupied they're entitled to keep. If they choose to give any away as part of peace deal settlements, it's entirely their choice, if they are happy it doesn't compromise their security etc. Land 'fairly won' in wars instigated by their enemies is fair game to my mind.
How simple: you win land in war, it's yours. End of story. But in truth it's nowhere near as simple as that. This is not solely a question of land, it's about the rights of a people. There are 2.4 million people living in those lands in the West Bank who while being effectively controlled by and subject to the state of Israel have no citizenship or voting rights within that state. That has been the position since the 1967 war. There are 1.5 million people living in Gaza which is also subject to air, sea and land border control by Israel. It is effectively a prison, not a state. Israel can choke it of supplies at any time. They too are citizens of nowhere, the leftovers that Israel could never incorporate into itself without changing the fundamental nature of the state itself. As long as this unjust situation persists there will be resentment, bitterness and ultimately conflict.
The solution of course would be either the creation of a Palestinian state or the extension of full citizenship of Israel to all Palestinians in the territories captured in 67. The present arrangement is neither one thing nor the other and has been allowed to fester and degenerate into the most brutal and intractable of conflicts. Remember around 20% of Israel's population (inside its pre-1967 frontiers) is Palestinian Arab. They have full citizenship and the right to vote in elections. While relations between Arabs and Jews are not perfect, nothing remotely resembling the Intifada has occurred within this community nor growing Islamisation and radicalisation by the likes of Hamas. Hamas is a product of years of Israeli occupation without any resolution to the status of the Palestinians living there. Indeed, in the early years the Israeli authorities turned a blind eye to the growth of the movement if not encouraged its development as they saw it as a way to divide Palestinian society and weaken the then dominant PLO. However, it grew beyond their control and turned into the monster it is today, making its terrible power to influence events all too clear with a wave of suicide bombings beginning in the mid-90s after the signing of the Oslo accords.
Israel chopped off the head of one dragon (Arafat and the PLO) only for another more vicious and uncontrollable to appear in the shape of Hamas. Same can be said of Hezbollah. They did not exist in 1982 when Israel invaded Lebanon to dislodge the PLO. Hezbollah was born as a reaction to the Israeli presence in Shia areas (and also to the export of the ideas of the Iranian revolution of 1979). It goes on and on, the mishandling of one conflict mutates into something else and peace is further away then ever