From a purely tactical perspective, the idea that a thousand-to-one prisoner swap makes sense before final status negotiations is stupid.
I'm don't begrudge the actions of his family, and their obvious happiness over the release of Gilad Shalit after 5 years, but I think that this will, in the long run, make things worse, not better.
It strengthens the role of hostage taking, as Hamas has explicitly stated.
I'm not a fan of Benyamin Netanyahu, and perhaps this colors my assessment of these developments, but I see this as a political hail Mary pass* by the Israeli PM.
Recently, Netanyahu's political popularity has been scraping the bottom of the barrel for some time, witness the tent demonstrations in Israel, and my expectation is that he will call for new elections while whatever popularity boost he had gotten remains.
*Pun not intended.
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