What to do in israel?

There are huge amounts of things to do in Israel, and it really depends on the kind of thing you like.
For a religious holiday, obviously, give several days to Jerusalem. Tours around the old city, going to the various sites (church of holy sepulchre/dome of rock/western wall)
Also, you could go around the port of Jaffa which is very beautiful. A few days touring Tel Aviv is always good, as there are many beautiful Bauhaus-architecture buildings.
A day trip to the Negev to do a hike or a camel safari is always good, you can also go to the dead sea and the nature reserve called Ein Gedi (I particularly recommend this- it is absolutely fantastic). You can go white-water rafting on the river Jordan too.
In the north, you can go skiing in mount Hermon (seasonal), stay in a kibbutz for a few days, or hike around the Galil.
I have only given a few highlights. Your best bet is to get a guidebook.