The occupied territories and East Jerusalem must be returned. Would it have been better to have made Israel a little bigger after the War? Sure, but we didn't and depending on whose map you want to put your finger it is either bigger or smaller than the biblical period.
The simple fact is that the Palestinians will never stop until they get the land back and get to settle in Jerusalem...they can be told to make their capitol elswhere...a yoke Israel has worn all these years in some circles.