The two state solution is the only real answer to the end of the Israeli and Palestine conflict. Palestinians are going to have to accept that they cannot eliminate Israel from the map. Israel will have to accept that they have no right to expand. There is no other choice.
At this point, anyone reasonable can see that Israel are the true aggressors of this conflict, despite their support from the United States which would suggest to us otherwise. That land belongs to the Palestinians, but as long as Israel stop encroaching on their territory, the two-state solution will go from an uneasy truce to genuine acceptance.
Palestine will not be satisfied with anything that doesn't involve the destruction of Israel. Palestine has made it clear that they do not recognize Israel and want to see Israel destroyed. Even if there were an agreement to a two state solution. Palestine would only see that as a sign of weakness and push until they achieve the destruction of Israel.
A two-state solution is one answer, but Israel and Palestine must be able to get along afterward. Israel must give back some of its settlements made since 1967. Palestine must also agree to be less aggressive against Israelis. Keep in mind, the average Palestinian and Israeli citizen is more moderate and less extreme than those outspoken enough to take action. Most everyone in that region simply wants to be left alone to determine their own destiny.
I do not believe the two-state solution is the real answer to the Israeli-Palentine conflict. Regardless of what is done in this area to promote peace, it has never worked. Conflict will always arise here due to all of the religions finding prominence with the area. There is no reason to assume that any one thing will solve the problem.