The occupied areas, i.e. land outside of Israel as established by UN in 1948. That includes East Jerusalem and all those places with settlements in Gaza and the West Bank.
Now, maybe there are some win/win agreements that can be made to change some boundaries. Nothing wrong with that. For one thing they need a land link between Gaza and West Bank. Just get the Palestinians to sign off on the deal. And, they need to have a sovereign state to make it legal.
Using military might to indefinitely hold or annex the occupied areas has been the major source of friction. Not to mention illegal under the [link|http://www.unhchr.ch/html/menu3/b/92.htm|Geneva Convention.]
Article 47
Protected persons who are in occupied territory shall not be deprived, in any case or in any manner whatsoever, of the benefits of the present Convention by any change introduced, as the result of the occupation of a territory, into the institutions or government of the said territory, nor by any agreement concluded between the authorities of the occupied territories and the Occupying Power, nor by any annexation by the latter of the whole or part of the occupied territory.
There are UN resolutions about this as well.