Of course, the Gilad Shalit issue has now become old news in the international community has neither the UN nor any other international organization has exerted significant pressure to make sure he is freed. The Red Cross has not been allowed to visit him. There has been no attempt at a rescue operation because, as outgoing Mossad chief Meir Dagan explained, the Palestinians have taken extreme precautions to ensure that he cannot be found by anyone. The present situation truly begs the question of what Israel's best course of action is.
On one end, there is a "give the Palestinians what they want" theory to free Shalit. Unfortunately, this is a very short-sighted solution that is likely to embolden potential kidnappers who will see how highly the Israelis value captured soldiers and use that value to pressure Israel to release prisoners, many of whom killed Israelis. Indeed, the PLO and Hizbullah used ambiguous statements about the whereabouts of Israeli airman Ron Arad for almost 20 years in attempt to exert pressure on Israel to release prisoners.
The other extreme would be for Israel to fight fire with fire and being kidnapping and/or assassinating Palestinian (Hamas) leaders as a means of exerting pressure on the Palestinians to both release Shalit and to discourage them from further kidnappings. Obviously, such an action would be detrimental to the "peace process" and would draw the kind of international condemnation that Hamas has not received for its kidnapping of Shalit. Imagine if Mossad agents kidnapped Ismail Haniyeh and kept him a hidden location until Shalit was released. Aside from possibly inciting a war, the level of condemnation on Israel would be enormous. It seems unlikely in the current political climate, with Israel attempting to rally opposition to Palestine's unilateral move for independence, that Israel would consider such a harsh option that would risk alienating world opinion.
Of course, world opinion cannot be the driving force behind Israel's military decisions. If it were, the Sayeret Matkal commandos would never have rescued Israeli hostages at Entebbe and would have never captured Adolf Eichmann. As I have frequently lamented, the rest of the world rarely has Israel's interests in mind. How else could one explain the fact that Jewish nationalism (Zionism) has been condemned as "racism" in the United Nations, a treatment that no other nationalist movement has received.
Moreover, the international community has refused to take action in a meaningful way, although France and Germany have more recently taken actions to try to convince Hamas to return Shalit. In the context of ongoing peace negotiations, Israel needs to take a page out of the Palestinians' book and place Shalit as a precondition to direct talks (much in the same way that the Palestinians have put settlements, borders, right of return and everything under the Sun as a precondition to talks). Because returning Shalit is a relatively easy and minor way for the Palestinians to show their good faith and willingness to make peace with the Israelis, their unwillingness to return him could help turn the Palestinians into the foot draggers because they would not even free one prisoner to get talks started. Obviously, imposing more preconditions on talks might backfire, as Israel might be accused of getting away from core issues in the peace agreements by bringing in Shalit.
But I think it raises a simple question: wouldn't the Palestinians want to extend some sort of olive branch to the Israelis in the interest of peace? The Israeli government enforced two moratoriums on the construction of Jewish homes in the West Bank to try to push talks forward. The best the the Palestinians have offered is a cessation of firing rockets for some period of time. Israel has also release Palestinian prisoners on several occasions in the past, most notably in 2007, when 450 prisoners were released at one time as a gesture to Mahmoud Abbas. Fatah leader Mahmoud Bargouhti criticized Israel for not releasing more prisoners. The response for Fatah, that this gesture was not enough really tells a lot about the mindset of Fatah (remember, Fatah are the supposed "moderates"), who repeatedly demand to have all of their negotiation conditions met before negotiations happen.
Considering the failure of previous peaceful gestures to more moderate Fatah, it seems like Israel's only recourse for getting Gilad Shalit back is to turn up the pressure on the Palestinian Unity Government. Anything less will simply encourage more kidnappings.