My father, and many other family members are Israeli and I have spent alot of time there..although 1995 was the last time I was there.
Of course you must see Jerusalem, both the old and new cities...and take a day trip out to Masada. There is a nature preserve on the way out to Masada that is amazing...and I'm blanking out on the name...but it's very cool to find this waterfall in a green cove right above an arid landscape.
I love the north...Safed, Haifa, the Galilee.
Tel Aviv is a very modern "big city" on the beach...
It almost doesn't matter where you go...it is a country of such profound dichotomy...physically, spiritually, culturally...and because it's so small, you can encounter practically the entire spectrum on a any given day. And it's ALWAYS interesting!
I hope Margo appears...It's been a while for me.
In any case...I'm jealous! and you're pretty much guaranteed to have an amazing trip.