Palestinian Arabs have had many chances to have a two state solution and have chose war every time. Prior to 1967 war, Gaza was occupied by Egypt and the West Bank was occupied by Jordan and there were no Israeli settlements in either territory, yet Israel was a constant target. So it was never about settlements. Settlements are a consequence of Arabs using these territories as staging grounds for attacking Israel.
When every Israeli left out of Gaza in 2005, it appeased no one, and Hamas rockets began to rain down on Israel.–Lesson learned!