Why do thousands of Palestinians want to be Israeli citizens?

From most of the world's point of view, including the popular media, it doesn't make sense for anyone identifying themselves as Palestinian to apply for Israeli citizenship; a move that most Arabs would consider equal to treason. Yet an article published by YNET News (English language edition) states that there has been a sudden surge of new applications over the past four months. If Israel is "the devil" in Palestinian eyes, what's going on here? The applications in question (an unprecedented 3000 over the past few months) come from Palestinian residents of East Jerusalem. The article states that about 250,000 Palestinians live in Jerusalem as permanent residents but, since 1967 when Israel liberated the Holy City, only 12,000 have applied for Israeli citizenship (roughly 300 per year). Palestinians in Jerusalem under this status are eligible for full welfare rights, municipal voting rights and unrestricted movement - without putting their loyalty to the Palestinian Authority into question. The average Palestinian family in East Jerusalem currently receives a $770 monthly stipend from Israel, according to this news story. So why put yourself and your family at risk by applying for Israeli citizenship and renouncing your Palestinian identity? The answer seems to stem from the upcoming Annapolis peace conference talk. A significant agenda item at the April meeting will certainly be the consideration of declaring East Jerusalem the "Palestinian capital". If this comes to pass, apparently the quality of life for those Arabs now living in that part of the city will suffer a dramatic change, and Palestinians are willing to face the consequences from the PLO by applying to live under Israeli rule which includes significant advantages. This is a startling development given the recent events that have occurred in Gaza, world opinion on the matter (which is quite predictable, though lacking insight), and the apparent attitude that Palestinian residents of Gaza hold towards Israelis. Here we see that, given a choice, the average Palestinian would rather live as an Israeli citizen and that it is largely political and perhaps religious pressure from the PLO, Hamas, and the Arab states that maintains the status quo. Please recall that we in the west once thought that the citizens of the Soviet Union wanted to live in a totalitarian state and not in a democracy. We now know that the Soviet government and the popular media created that illusion and that, since the fall of the Berlin wall, former Soviet citizens have expressed their desire for democracy in great numbers. Why shouldn't the Palestinians be the same? Of course, those that hold either permanent residency status or even citizenship (and Israel does have Arab citizens) continue to feel free to "damn" the Israeli state that provides for them and accepts them. This could be just to "save face" for some, however others may have no problem "biting the hand that feeds them". Update: Lest you think that only Israeli news sources have carried this story, I also found similar articles at The McClatchy Washington Bureau and BBC News. The BBC story is particularly interesting, because it carries a warning from Ikrima Sabri, top Muslim cleric in Jerusalem renewing the fatwa (edit) against Arabs becoming Israeli citizens. Violation of such edicts can have "violent" results.