I disagree. I believe Israel won and my proof is the current situation in Lebanon. Olmert got what he wanted (minus the troops returned, he did loose in that respect). Olmert knew that there was absolutely no way that he could wipe Hezbollah of the map, but that wasn’t his plan (even if he did state). Olmert is a politician, and not nearly is thick as many describe him. I believe that the Prime Minister wanted the Lebanese government to be more responsible for the extremists gaining power in their country. He wanted the weak Lebanese government to be exposed, so that it could begin to rebuild. International troops were sent in to mediate the situation and currently the Lebanese troops are on the offensive against the terrorists embedded in their homeland. Israel did win and, more importantly, got what it wanted.
Of course, the country could have handled the war better, more objectives could have been achieved, but a victory is a victory.
As a bonus, they used probably room-temperature hostages to humiliate Israel, which is what Islamic terrorists do for a living.