We've been allies with Israel for what 50 or so years now? How many wars have they fought with us compared to Britain/France/Australia? You would have to be crazy to think Israel is more important than any of those countries.
America had a weapons embargo on Israel up to 1967. America and Israel were not the best of friends until about that time, when USSR intervened more strongly in the affairs of the Middle East. Obviously Israel always enjoyed domestic American support because of the Jewish community, but it was nothing like the ties the countries have now.
As opposed to the popular opinion, Israel was formed by a bunch of atheists, some right wing but mostly from the left (borderline or actual Leninists). The famous Kibbutz form of settlement was a miniaturized Soviet Kolhoz. The Israeli governments was exclusively left leaning up to 1977. Under these conditions, picking, as a strategic as well as a cultural ally, the US over USSR wasn't that obvious (but Ben Gurion did it anyway).
As for wars, there are two reasons why Israel is left out of the game:
1. Israel is not a part of NATO, which ruled out confrontations like in Kosovo
2. US doesn't want Israel taking part in anything related to the Muslim world, so it doesn't end up looking like a anti-Muslim crusade. This is why Bush made Israel sit quietly when it received Scuds from Iraq back in 1991, he knew that involving Israel would tear his coalition apart.
Still, Israel did its part for the US, mainly in intelligence and deterring the Soviets from bringing the ME under their exclusive influence. Not only were the Soviets arming and training the Arabs, actual Soviet pilots flew against Israeli pilots in the 1967 war and again in 1973 (and got their asses handed AFAIK).
Anyway, all I'm saying is that good relations work out for both countries, and Israel is a friend, regardless of what it chooses to do in Jerusalem. Look at it the other way, of Obama sacrificing an ally to appease the Muslims.