I love Israeli music very much, both contemporary and traditional. You should be careful with playing too much of it, because sometimes people get bored, as they do not know they songs and can't understand the lyrics. It really depends on who your guests are. If you have lots of Israelis invited, they will surely enjoy the Israeli songs.
For the Hora dancing, I saw a song list on this site, and anyway, any Mitzvah DJ should have the songs.
You are having a Israel themed Mitzvah, so you probably would like to play also some contemporary songs. I love Sarit Hadad. She sings beautifully, and has also good party songs. Dana International has good party songs (check her recent "love boy" and "Indian Movie"
Another one I love is "Yachad" of a group called Gaya. You should probably be able to listen to these songs on YouTube.
Bye!
