You must implement what is agreed to immediately, and then continue with negotiations. As we know the Palestinians have always had the "all or nothing" approach. They are doing that now with the Shalit deal. The reason the Palestinians won't agree to this is simple. It would reveal their true intentions, which is not peace with Israel, but to destroy Israel. If the Pals had a country all attacks against Israel would have to stop. As a country the rockets would be considered "acts of war", by one country against another country. The "resistance"(terrorism) could not be justified and Israel could respond to the country attacking it. The positive part for the Palestinians is they could prove to the world they truly want peace. If the attacks stopped public opinion could force concessions from Israel they refuse to give at this time. The problem is the Pals really do not want peace.
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Preliminary report: Shooting attack in East Jerusalem's Damascus Gate (Haaretz)
from the article: Olmert's negotiator: Full Mideast peace impossible