I'm going to go out on a limb here and say that this is good in the long run for Israel. I'm not going to pretend that this is isn't a humiliation, but considering that we were taken by surprise, it could have been much worse. 200 killed + hostages taken is a severe blow, but nothing compared to the obvious parallel, the Yom Kippur war. This will force the government and defense establishment to reevaluate the complacent policies that led to this situation, and they will obviously be applying lessons learned to other fronts, most importantly the border with Lebanon.
Contrary to some of the wilder sperging in the thread, Iron Dome is operating as normal (no system ever has a 100% success rate), Bibi has not been taken to the hospital, and most importantly the population of Israel is now unified - we've been shocked into remembering who our real enemies are, and what they are capable of. We will almost certainly get a unity government for the duration of the conflict, and maybe even longer.
There are only two things I'm personally concerned about: a) the government cucking out due to the hostages taken into Gaza and b) third party involvement. I think that the first is unlikely, and while the second is obviously Hamas's goal in the larger conflict, the IDF is now on full wartime footing. Hezbollah has to know that it will be annihilated if it tries to go on the offensive now.
EDIT: The Israeli defense minister has stated that Israel intends to topple the Hamas government in the strip. The only way this is is happening is a full scale ground invasion and re-occupation. I would not be surprised to see if voices on the right call for reestablishment of some of the settlements dismantled in 2005, and while I don't think that will happen, the chance is not entirely negligible.