Since when are there more 'Palestinians' than Israelis??? It is the other way around. Israelis out number the 'Palestinians' by about 2 to 1.
According to the CIA World Factbook:
Gaza Strip = 1325000 Palestinians
annual birth rate - death rate = 36.67 per 1000 population. (i.e. 3.67% inc per yr)
West Bank = 2311000 Palestinians
abr-adr = 29.14 per 1000 (2.91 inc per yr)
Israel (inc settlers in above areas) = 6200000
Birth rate - death rate = 12.26 per 1000 (1.23% inc per year)
On top of that , net annual migration into Palestine is roughly 2 per 1000 and net migration into Israel is 0.7 per 1000. However I am not very sure what this number signifies...
So 2:1 looks about right.
However, the net rate of population increase of Palestinians looks to be around 2.5 to 3 times higher than that of Israelis. So doing the math suggests that the ratio will be at 1:1 in 30-40 years, depending on what figures you use...and birth / death rates do tend to be stable over the long term...
So there is a definite need to sort out the situation before then, because sooner or later, unless Israel becomes two countries, Palestinians are going to have to be given a proper say in the running of the country in which they are going to be the majority. I have no idea who 'by rights' should get what, but I think that changing demographics are going to start becoming an increasingly relevant issue.