Yes war, first be aware that Israel signed peace treaty with Egypt and Jordan only. Syria, Lebanon, Irak and probably others like Lybia are only under ceasefire, not peace treaty so technically Israel IS AT WAR. When it comes to the arabs from the territories, of course, there's no formal declaration of war because they don't have a state yet. But they have a stance, especially the ruling party of which charter calls for Israel destruction (probably by means of war...). Hiding behind the fact that there's no formal declaration of war is giving a reward to the guerilla/terrorist methods of arabs. Full fledged terror must be recognized for what it is : low intensity war.
from the article: Peretz: Gaza beach blast may have internal Palestinian cause