This isn't going to be a "Why I don't observe Yom Ha'atzma'ut" post, because I do (whatever that really means). However, I do take issue with the manner in which it is observed by some.
Someone once said "I'm religious and a Zionist, but I'm not a Religious Zionist." I agree. The foundation of the State of Israel is unquestionably one of the most significant events in the last 1800 years for the Jewish people and for Judaism. However, we're not in the End Times yet. I am with R. Soloveitchik in adding a word to say "Harachaman hu yevareich et medinat Yisrael shetehi reishit tzemichat ge'ulateinu" = "May the Merciful One bless the State of Israel, so that it may be the beginning of the flowering of our redemption." Anything else is premature.
I think that if one is going to say hallel on Yom Ha'atzma'ut, it should be the abridged hallel said on Rosh Chodesh and the last 6 days of Pesach. If our joy is less than complete even on Pesach, the paradigmatic festival of past and future redemption, in recognition of the Egyptians who drowned in the sea, kal vachomer our joy is less than complete on a festival of more recent redemption that is tied to suffering that persists to this day. Let's keep the full hallel reserved for occasions that warrant unmitigated celebration.
On that note, I find the "al hanisim" for Yom Ha'atzma'ut in Siddur Sim Shalom to be entirely inappropriate. "You delivered the many into the hands of the few, the wicked into the hands of the righteous" ... and complex understanding of issues into the hands of black-and-white dichotomies. It's one thing to recite those dichotomies for Chanukah, when everyone involved in the historical event that inspired the holiday has been dead for 2000 years, and the characters in the story have become symbols for abstract ideas. It's quite another thing to do this for an event that happened a mere 57 years ago, when many of the people referred to as resha'im and tzaddikim are still alive.
As we say every day, Baruch atah Adonai, hamachazir shechinato l'Tziyon.