Steven V. Mazie has an op-ed in today's Times which lays out three key elements of any future Israeli constitution. DovBear, who in an uncharacteristically sensible post (which he decided to remove), explains why some of the proposals should not be adopted. Forming a Constitution in Israel will be very difficult.
A Constitution will, almost by definition, limit and constrain governmental powers, and politicians are unlikely to voluntarily cede power. The US Constitution was the result of the parties recognizing that only a strong central government would ensure the existence of the union. Israel's biggest threat, or so it seems, is external and no Constitution will solve the Arab-Israeli conflict.
Nevertheless a Constitution is required for the efficient function of government. Many proponents of a Constitution support its creation because it'll protect civil rights. But in Israel that's mostly unnecessary because the Supreme Court is notoriously activist when dealing with civil and human rights issues in Israel proper (it functions differently in the territories).
A Constitution is needed to create a separation of powers. Israel's Supreme Court considers itself the protector of democracy and functions as a super-lesiglature. The legislature cannot check the Court. But the Court cannot check the legislature or executive branch either. The Court will often hand down a ruling, but no one will enforce it. The Kaadan case is an example where the Court decided that that Jewish-only communities were illegal, but five years later Kaadan still hadn't been able to move in.
Hamilton once said that the courts are the least dangerous branch because it wields neither the power of the purse or arms, and must therefore be convincing. Israel's Supreme Court decides whatever it wants whenever it wants. But even when its decisions are convincing the government feels no pressure to implement them.
A Constitution is no guarantee that governmental powers will be constrained (just look at Congress and the Court in the US). But it is a step in the right direction.