Jerusalem is stunning, get there any way you can. I backpacked for less than $20 per day.
I enjoyed my travel in Bethlehem -- it is great, please go there and enjoy.
If you go to Eilat, you will fall in love with the town, its beaches, the desert on the back, its nice bars and promenade...Don't miss the dolphin reef and have a drink at 3 Monkey's-- the best pub in town!
The ride along the Dead Sea Highway offers beautiful views of the Dead Sea in Wadi Arava and across to the Red Rose Mountains of Jordan. The Dead Sea is a must visit on your itinerary in Israel. Take a bottle of water with you and wear your swimsuit under your clothes.
I visited Mitzpe Ramon in September 2003. And I was the happiest woman in the world there. There it is -- pure, genuine, wonderful paradise.
I lived in Tel Aviv for 8 years. It is a fantastic city with brilliant nightlife and loads to do. The "City that never sleeps" says it all I think. A haven for backpackers.