You suggest that the largest party should form the government. Not only will it lead to very strange results (50% vote, 20% of those vote for party X, party X has the support of 10 % of the population and yet gets to form the government on its own) but it also limits democracy by shutting out any smaller party and minority opinion. A two party system is much less democratic than a multi-party system, since the voters are forced to choose between only two options. Livni had the support of some 25 % of the voters, the current government has about twice that. It's very clear which government that would be more "democratically suitable".
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Initial report of stabbing attack in South Hebron Hills (Haaretz)
from the article: Clinton: Palestinian state achieved through negotiations is inevitable