The picture above is of the release of Israeli soldier Gilad Shalit, who had been held by Hamas and was freed after a prisoner exchange negotiated by Egypt. Ahmed Jabari, the Hamas military leader who masterminded the operation to capture Shalit and headed the negotiations on the prisoner exchange, is to his left. The man on his right is, I believe, Mohamed Raafat Shehata, then a senior Egyptian intelligence officer in charge of the Israel-Hamas mediation, and now the head of Egypt's General Intelligence Service.
Jabari's assassination removes a man who was a chief point of contact for the Egyptians, and who the Israelis were at one point interested in establishing direct contact with (during the talks, they asked this, Jabari refused). Of course, there are other contacts and Jabari will be replaced. But in the delicate type of negotiations Egypt has led in the last few years, personal relations are important. Over time, negotiators get to know their interlocutors and develop a nuanced understanding of their quirks as well as a personal relationship — which can be tremendously helpful in crisis situations.
In the Egypt-Israel relationship today, there is no political track: the elected leaders of both countries do not talk to each other, and appear unlikely to do so. Part of Israel's aims in the current Gaza bombings may be to force President Morsi to engage the political track. The Israelis are known to want that direct political engagement and recognition. Aside from the political track, the Egypt-Israel relationship today is chiefly conducted through other channels: through the diplomatic corps of the two countries for routine matters, through intelligence channels for all the important crisis-management and negotiations stuff, and to a lesser extent through the militaries for border issues.
In other words, Egyptian intelligence is Israel's best contact in Egypt, the only one with which it has both a solid relationship and that has real clout inside of Egypt (the diplomats don't have clout and the mil-mil relationship is not as deep as the intel-intel one). One can't help but think that in assassinating Jabari, the Israelis have hampered Egyptian intelligence's ability to conduct mediation as effectively as possible. It appears Israel's decision to assassinate Jabari was to show that, now that Shalit has been freed, his abductor has been killed: it's a trophy of sort, compensating for a capture that taxed Israel's political leadership. Whether it'll be worth the cost in terms of the relationship with the Egyptians — for instance the next time an Israeli soldier is held captive or Israel's leadership wants to negotiate with Hamas — is another thing. Both at the political level and at the intelligence level, the Egyptian leadership must be asking itself, long-term, whether it can do business with Israel.