I'm not quite sure what the point is - I was not aware Israel's contribution to humanity has been of any particular significance, and those things it has contributed to humanity (providing a stable homeland for the Jews and giving them an international personality to protect Jewish interests) are not tied to its location in what would otherwise be a muslim state.
Actually, thinking about it I bet it would be a thriving tourist destination with great beaches and historical monuments coming out of its ass. The whole region, Palestine, Syria, Lebannon and Jordan would be an interconnected archeological/historical tourist mecca, much like Egypt. Beiruit would probably still be the vibrant, cosmopolitan "Paris of the East" that it once was, and there may well have been an awful awful lot less guns, death and misery going around.
I mean, Israel is a fait accompli, so there's nothing to be done about it beyond absolutley supporting its right to exist just like any other country while trying to rein in its more racist and extremist tendancies, but lets not kid ourselves that it was the best outcome for everyone that could have been achived.
EDIT: OK, after a quick wikipedia search I have familiarised myself with Isreli achivements in electronics, the space industry, medicine (especially stem cell research), renewable power and water conservation, and also taken note of its significant number of world class universities and nobel prizewinners (in short, a thriving knowledge economy). Leaving aside the argument that they don't need to be living in any particular spot to do this, I think it safe to conceed that there are more significant achivements on Isreal's side of the ledger than I suggested above.