A lot of this is financial and time dependant. The most notable holy sites are Jewish, Christian and Muslims sites of Jerusalem, the Christian sites of the Kinneret/Sea of Gallilee and the Baha'i gardens of Haifa. If you have time, I would devote at least 4 days to Jerusalem alone, as there's a lot to see there. Among them, the Western Wall and the Western Wall Tunnel Tours are a must. I'm less well versed in Christian sites in Jerusalem, but there are many, and I'm sure a number are a must as well. If you can get permission, visitting the Temple Mount and current Al-Aqsa mosque and Dome of the Rock would be most informative. I would also suggest spending an extra day in Jerusalem on a sabbath, to see how the Jewish sections of the say really power down resulting in a real day of rest. The severly reduced traffic and relative calm of the streets is an interesting site after the hustly and bustle of daily life. The Christian churches and sites of the Kinneret region are said to be very interesting, but I don't think more than 2 days are neccessary unless you would like to spend some time either swimming in the Kinneret or hiking around the Gallilee area. Tiberias is most likely the best location for you to stay up there. The Baha'i gardens are very beautiful and impressive, but wouldn't take more than a day. You could either stay in Haifa separately for a night, or drive all the way across from Tiberias (wich would require you to get up extra early) which is certainly doable. Also, while not strictly religiously oriented, it would still be informative to visit such locations as the Dead Sea and Ein Gedi for tourism purposes and Masada and other excavation sites for historical/archeaological interest. Eilat also offers a nice beach and warm sunny weather, if you're interested, and some good scuba-diving.
Hotel accomodations are really a matter of money. In Jerusalem especially, you can find higher end hotels, including the Hilton, Crowne Plaza and the famous King David. More contemporary options include the Inbal or the King Solomon hotel, though they are still relatively expensive. Cheaper options exist: field schools offer minimal accomodations (nice plain room) but are very cheap. There are a couple in and around Jerusalem and much more up north around Tiberias, and down south around Eilat. If you plan on moving from area to area, renting a car may be useful, though within Jerusalem it may be easier just to use mass transportation.
Have a nice trip.