I beleive a defense against the short range rockets is being developed. Unfortunately, unlike medium and long range ballistic missiles, these short range Kassam and Katyushas don't have a long enough flight time to really track and shoot down. The longer the range the missiles get, however, the better chances Israel will have of defending against them. Arrow is still being tweaked for the longer ranges, and there are only a couple batteries of them deployed. Hopefully several more will be deployed, but again, they are a defense more against ballistic missiles.
Man and woman arrested for attempting to attack Israeli forces in Jerusalem's Old City (Haaretz)
from the article: IDF says Hamas responsible for Katyusha fired from Gaza Strip