Dress Etiquette
First thing you need to know is that Israel is a westernized country, while at the same time, it is religous and traditional. Specifically in Jerusalem, you need to pay attention or else you'll start a riot. Driving , for instance, on Saturday in a "Haredi" neighborhood (Haredi= ultra orthodox Jew), will get most certainly incite the masses- expect at the very least heckling, and maybe even a stone throw. Or simply walking into Meah Shearim, a rather ancient ultra-orthdox area (they've been around before the State of Israel, they consider it sinful and ignore it's existence) dressed in typical western fashion (bare arms, shorts or trousers for women) will bring rise to protest. Specifically, groups of men and women touring, especially during the popular holiday seasons will incite the locals. TIP: before Meah Shearim, break up into small groups (2-3) and leave a minute or two between you.
During Saturday and Jewish holidays, The "Haredi" streets in Jerusalem are usually blocked by the police, so it would be difficult to accidentally wander in. None the less, it would be advisable to visit Jerusalem mid-week.
Most parts of Israel (Tel-Aviv,Haifa, Eilat etc.) are completely westernized. No need to worry about a special dress code. In fact, dress is so casual you never have to worry about dressing up, especially in summer.
Don't forget to use sun-block. The sun in Israel, even during the winter, is very strong.
Tipping
The going rate for tipping in Israeli restaurants and cafes is between 10-12% depending on how pleased (or not) you are with your waiter/waitress. 10% is usually the minimum, with 12% an average tip. So whenever possible, but only where warranted of course, try to be generous with your tips! Taxi drivers do not expect to be tipped (or at least - they are not surprised by non-tippers. Locals do not tip in taxis).
Road and Driving Etiquette
Drivers are generally aggressive, so don't take offense, but drive carefully and defensively. Always check left and right for cars before you go through a GREEN light. Sadly, some drivers here tend to try to beat the red light and see it as a challenge which they must get through as fast as they can.
