i understand that the jews had no homeland and were in need of a country, but was palestine no longer a country as a result of the formation of israel?

Short answer: because they had been persecuted just about everywhere else they went. Slightly longer answer: because at the end of WW2, they were looking for a place to set up a Jewish State where people who hated them would leave them alone, and at the time, nobody wanted the land that is now Israel, so the Jews moved in. As soon as the Jews moved in, the other residents of the middle east decided that they would destroy every settler of Israel, and haven't given up since. Their problem was, the Jews didn't particularly want to be destroyed, and they have defended themselves, quite admirably I might add. Source: http://wiki.answers.com/Q/Why_did_Jews_move_to_Israel&src=ansTT

The factually correct answer is that they left due to several reasons. Economic, social, political and personal. The process started in the Roman times. There are some demographic estimates that indicate that the Jews may have made up 10% of the entire population of the Roman empire. 5 million out of 50 or so. Part of the original Jewish diaspora and movement out of the middle east (Roman times) was due to the success of this group of Jewish people. Their communities were established almost everywhere around the mediterranean and remained in place when Rome moved to Christianity. Others moved and settled in many traditional trade routes such as parts of Africa, Persia and even India. As Europe flourished economically and geopolitically, Jews grew in number and moved and settled in places of economic, social and political opportunities primarily focusing on wealthy urban rather than rural areas. They were good in trade, finance and science and thus were in demand in such geographies. They were persecuted by various groups from time to time. This peaked in World War II. The Jews were systematically persecuted and many therefore moved to the USA, and South America. Many realised that they needed their own homeland. The concept of a home for world Jews took hold and finally they created Israel.

Many of them had no choice as they were deported by the Romans after the revolts of 70AD and 135AD failed.

They were dispersed by the Roman Empire. The Celts, Cimmerians, and Scythians who inhabited Europe were all closely related with the Jews. The peoples of western Europe are largely descended from the exiles of the northern kingdom of Israel (745-721 BC), so they show a little less animosity toward the Jews than other peoples do. Revelation speaks of Judah fleeing to the "wilderness," the same place Israel went to after their captivity in Assyria (Hosea 2:14).