A week after voting, and it’s been quite a little horse-trading affair, with at least one medium-sized surprise - hard-line nationalist party Yisrael Beiteinu and their 15 seats are still in play. They have an interesting future, but for now are relishing their potential king-maker role.
Here is how the 120 Knesset seats broke out after the election, broken down by the natural left-right alignments, even though the details are far more complicated:

Left bloc - 55 seats:
Kadima - 28 [center/center-left, recently split off from Likud, the current incumbent ruling party]
Labor - 13 [about what you think - leftist]
Meretz - 3 [leftist]
Arab parties - 11 [no natural allies, but they will not line up with nationalist/religious bloc]

Nationalist/Religious bloc - 65 seats:
Likud - 27 [center-right]
Yisrael Beiteinu - 15 [hard-line nationalist, up-and-coming power]
Shas - 11 [the largest religious right]
other religious parties - 12 [religious right]

For more context, see my front-pager on election day, with insightful commentary from several users.

Now to form a government, somebody has to assemble a coalition that has 61 seats or better - the more seats, the more stable, to the extent the parties can play well together. I was wrong when I asserted shortly after the election that the right-side bunch would quickly come together and get this deal done. Nope, the YB has thrown a monkey wrench into affairs.

So, here is the gossip, rumors, and other fun:

• Shas, United Torah Judaism, National Union, and Jewish Home - the 4 Jewish religious parties representing 22 votes, are solidly with Likud if they form a center or center-right coalition. They would likely stay in a Likud-Kadima “unity” government, UNLESS the Likud-Kadima coalition also brought in Labor.
• Yisrael Beiteinu and their 15 votes are a very uncomfortable partner with Kadima, although they are in deep negotiations. Additionally, Labor and Meretz have both said that they will not join a coalition with Kadima if YB is also on board. This pretty much seals it that Kadima has no chance to form a governing coalition without joining Likud as the lesser partner.
• Yisrael Beiteinu has accused Likud of “listening too closely to Shas” since Likud is not responding to a list a of demands that YB issued to both Kadima and Likud.
• Yisrael Beiteinu has personality issues with Likud. Apparently pretty deep issues. They are also a party very clearly on the rise, and blowing them off has some down-the road consequences. So Likud is damned if they do, damned if they don’t, in dealing with YB.
• Kadima has stepped in it, in the last few days, by allowing their dovish side to show through. Their electoral success came in part due to a very late hawkish showing by Livni.
• Likud and Kadima have had fairly deep talks about a unity coalition. Due to Likud having vastly superior leverage, it would certainly have Netanyahu at the top, but feature heavy Kadima presence in the cabinet, with at least a couple of the top jobs. In such a coalition, the religious parties would probably stay in the game, giving this coalition 78 of the 120 seats - very solid.
• Finally, even with Yisrael Beiteinu and Likud not really playing nicely, the strong possibility still exists that they will yet form a natural right-side alignment, freezing Kadima out of the new coalition.

I’m just the reporter here, with no opinion more valid than yours, but here’s my thought. Previously I thought the Nationalist/Religious bloc would form their coalition with 65 seats. Now I am inclined to think the other major possibility is more likely - the “unity” coalition, where Likud leads, with Kadima and the religious parties joining, and YB on the outside. And as much as I love Netanyahu, I think cutting out the new guard is unhealthy for long-term success of both Likud and Israel.