New Israeli settlements present new targets for attacks and an escalation of violence between Israel and Palestine. A freeze on Israeli settlements in Palestinaian Territories would help to keep things more simple, by reducing violence and creating an atmosphere for negotiation. If the Israelis build in Palestinian territories, the Palestinians will react and the conflict will be prolonged.
The very existence of settlements in the West Bank and Gaza contradicts with the 49th article of the Geneva Convention ((IV) relative to the Protection of Civilian Persons in Time of War) which dictates that those living on settlements are committing war crimes. Secondly, many Palestinians feel that Israel isn't 'serious' about peace talks when they are effectively turning Palestine into a vast series of Islands separated by segregation and settlements.
Israel needs to stay within its own borders and not press into Palestinian territory. The extra settlements exacerbate an already tense situation in the region. Anytime Israel increases its territory, Palestinians fight back with suicide bombers and rocket attacks. It doesn't matter who lives in what part of the region. Israel should maintain its borders as-is.