This won't be a long post, as I'm not going to go over what the Israel-Palestine conflict is, assuming that if you are reading this then you already know. If you don't, read this first.
Here are some maps showing the changing borders of Israel and Palestine over time (taken from israelandpalestine.org):
Note, I am assuming we can agree that the presence of the Palestinian-held Gaza strip is primarily to maintain ties and borders with Egypt, a fellow Islamist country, and that the Palestinians have a right to a State.
This would leave me to conclude that, if we wish a two-State solution (and I do), then this area is the most logical place to begin drawing Palestinian borders. Borders which must allow Jordon and Egypt (both Islamist countries) to meet with Palestinian State. However, the Gaza strip itself need not (and should not) be the solution to this, as it cuts a Palestinian State in two while at the same time surrounding the state of Israel. I think it's also fair, if possible, to allow Palestine to have ocean-going access for global trade and economic growth.
This is why I propose the following (note border is for illustrative purposes only, unless specified):
From the above, we can see that borders with Egypt and Jordon are maintained and that the border cuts through the least populated parts of Israel. Palestine also now has complete access to the Gulf of Aqaba, taking control of the city-port of Eilat which has a tourism and trade economy. Israel, meanwhile gains full control of the west coast and exclusive access to the Mediterranean and Western Europe. It is no longer surrounded by Islamist States.
The process would of course, not be cut and dry, requiring negotiation over specific settlements and where they fall on the other border, but if done correctly, both States may profit from each other. For instance, Palestine could be contractually required to 'pay back' Israel over time for the infrastructure in towns and cities like Eilat that have changed borders, and the money could be used exclusively for the rehousing and compensating of those that have had to relocate back across the new Israeli border.
Jerusalem looks unchanged on my map, however I would propose a unique opportunity presents itself. The city is holy to three religions: Islam, Judaism and Christianity. I would propose that the city becomes a shared mini-state. A neutral ground with a unique police-keeping force made up of people from all three Abrahamic religions. It must be inclusive. The Israelis and Palestinians could maintain 'quarters' on each side of the city by all means, but the government and police force must be made inclusive of all three backgrounds. Christians aren't of course in the same numbers as the others in this region, but having them included in this way ensures a third, more neutral representative to help keep the peace and maintain balance.
There we have it, a two-State solution.