Recently returned from two and a half weeks in Israel. Wife & I chose not to join a tour, but did check out Rick Steves' video and other travel guides. Hired a private taxi-tour guide who was awesome , for four days of our journey. Jiries Asmar (jerryasmar@google.com, +972 52-2381055) became a friend in that short time. He's an Arab Christian, fluent in Hebrew, Arabic & English, worked in the national Israel Museum for 25 years, and seems to know everyone. Hooked us up with "back-door" guides at some popular spots, allowed us all the time we needed where we wanted to linger and/or talk with locals, and even safely took us into West Bank areas (Hebron, Bethlehem, etc.). Can't recommend him highly enough.
We've been spoiled by Rick Steves' guides in our travels in around Europe which provided all the encouragement we needed to explore Israel on our own. Spent a week in Jerusalem, a week in the north (Galilee region) with a rented car, and a few days on the coast in Haifa and Tel Aviv. Never felt anything but safe and found the Israelis to be kind, hospitable and willing to go the extra-mile wherever we went. Security was evident but did not really provide any impediments. The only frustration we encountered was in the north where signs were usually displayed in Hebrew, Russian and Arabic. The three alphabets added to our confusion, but we still managed quite well. (Jerusalem/Tel Aviv/Haifa had English along with Hebrew.)
Even with travel advisories, I'd return to Israel in a heartbeat.
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