Calling for a 'Palestinian State' is the present rhetoric of legitimacy in Middle Eastern foreign policy. Just the same as all existing and coming gov. regimes (even from a coup d'etat) need to legitimate themselves with the rhetoric of 'democracy'.
The important factor to look at isn't whether Bush said 'Palestinian State', it is to look at what he means by 'Palestinian State'.
And from his other statements, his more or less carte blanche backing of the Sharon gov, and the actions of his administration, it seems to me that 'Palestinian State' means semi-Palestinian autonomy in a three-room, fourth-floor apartment in Gaza City.
Bryan