They are built in disputed territory, The West bank has never been a palestinian state. Despite U.N. condemnation, there are no sanctions against Israel. That means, NO PROBLEM. However, the Secretary General of the U N might be right. Settlements hardly contribute to peace. That is another story.
UN: At least 1,332 Iraqis killed by violence in July (AP)
from the article: UN chief Ban in Ramallah: Settlements undermining peace