Up front, unambiguous, and with no obfuscations: I'm in favor of the continuation of the settlement freeze. Not in Modi'in Illit, which will remain in Israel no matter what, and certainly not in any part of Jerusalem. But in all the places we know we'll leave some day - and let's define them broadly, not narrowly - I'm in favor of the freeze. I'd be in favor of it even if there were no negotiations: we know that someday we're going to disband those settlements, so there's no rational point in building in them, is there. So let's stop.
On that level, I've got no problem with the American position that since negotiations have finally started it would be a bad idea to interfere by building in the settlements. So long as the negotiations may possibly lead to peace, no changes should be made in the disputed areas.
By either side.
So while there's no problem with Palestinians building in areas we all know will eventually be part of their state (the corollaries of Midi'in Illit), it should be clear to all sides and the international community that the Palestinians, too, must refrain from actions which harm the negotiations. Things such as firing rockets at Israeli civilians, shooting at their cars, or stoning Israeli civilians. Shhh! There are negotiations going on, and all sides must refrain from harming them.
Why is this reciprocity not crystal clear? Because it isn't, you know.
Update: Khaled Abu Toameh (a Palestinian) says the same, only with greater fervor.