Pack like you would for a trip in your home country. In Israel you will find people from all over the world, each with their own style of dress, so you will quite probably find someone that is dressed like you. When on tour, you should be respectful to the various religious sites you will be visiting and their particular demands. Shorts and revealing shirts, on men or women, can lead to you not being allowed to enter certain holy sites. Your guide will advise you the evening before if there is a need to dress more conservatively or not. For men that means pants, T-shirts are fine. For women, shirts that cover the shoulder (some travel with a shawl that they can throw over their shoulders at the proper time) and pants/dresses that come past the knee.
As with anywhere else in the world, what you wear also depends on the season. Be sure to check with your Tailor Made agent what is advised for your group's needs depending on the season and the sites that you will be visiting.