Remember there was no Palestine as a state. It was part of the Ottoman Empire. And I think that we've had an invented Palestinian people, who are in fact Arabs, and were historically part of the Arab community .... And they had a chance to go many places. And for a variety of political reasons we have sustained this war against Israel now since the 1940s, and I think it's tragic.
That set of facts is uncomfortable for some people, but it is a set of facts nonetheless.
The Arabs who lived in Palestine only really began staking claim to a "national identity" after the Arab countries which tried to take over the small portion of Palestine claimed by Israel in 1948 and split it among themselves failed to do so -- and had they not failed to do so, those Arabs would have become Egyptians, Syrians, Jordanians, etc. I suppose you could say the seeds were planted in 1918 with the dismemberment of the Ottoman Empire, but it took the 1948 war to water and sprout them.
None of that invalidates legitimate Palestinian Arab property claims, or even Palestinian Arab aspirations to a state of their own (aspirations which Gingrich, by the way, supports).
I don't see why the claim is even considered insulting. "Americans" were an "invented people," too. Until 1776, they were Britons living in Great Britain's American colonies. Even after war broke out in 1775, they remained so for more than a year, demanding only "the rights of Englishmen." Then, under the influence of Thomas Paine, they re-"invented" themselves, and made it stick.
I suspect the Palestinian Arabs will make it stick, too, but not by pretending to a history that doesn't exist. I'm not with Newt on US foreign policy by any means, but I agree with him that while we're entitled to our own opinions, we're not entitled to our own facts.