The Palestinians Don't Want A Two-State Solution
At least officially speaking, they want all of Israel and all of the Jews dead, per this lovely hadith and per the Hamas Charter.

Jeff Robbins writes in the Boston Globe about a "very good question" in the Israeli-Palestinian conflict:

At a panel on the Mideast conflict two years ago, then-Representative Barney Frank asked the late Leonard Fein, a left-leaning critic of Israeli Prime Minister Benjamin Netanyahu, why it was that if the Palestinians truly desired a two-state solution, they had continued to reject Israeli offers of a Palestinian state in return for peace. "That," replied Fein, "is a very good question."

With the Palestinians' decision to enlist the United Nations to impose terms on the Israelis despite objections by the United States, the question remains not only a very good one, but the proverbial elephant in the room. Why, indeed, is it that the Palestinians rejected Israel's offer for an independent Palestinian state comprised of virtually all of the West Bank, the Gaza Strip, and a capital in East Jerusalem in 2000, in 2001, and then again in 2008? After all, acceptance of any of those peace deals would have resulted not just in an end to the settlement construction that the Palestinians assert is the obstacle to peace, but the evacuation of tens of thousands of Israelis from the West Bank. What inference is a reasonable person to draw from that rejection?

...The answer to the "very good question" posed by Frank, and the reasonable inference to be drawn from the history of Palestinian rejectionism, is not a particularly happy one. It is that Israel's proposals for an independent Palestinian state have come with a condition that the Palestinian leadership has regarded as a deal-breaker: a permanent end of the conflict, and a commitment to accept Israel's existence. By contrast, the Security Council end-game sought by the Palestinians is an end-run around any such condition; it would impose on the Palestinians no obligation to end the dispute.

This is not by chance. As Abbas knows, the Palestinian street opposes any end of conflict with Israel that fails to bring about its disappearance.