It should be celebrated and vested with religious significance. I am disappointed that so much of the religious right ignores it - as though it is just another day. In some cases even condemning the state for its very existence (ala Satmar)!
That being said, I remain unconvinced that this event is the 'first flowering of our redemption from exile'. That was in fact the view of my Rebbe, R 'Ahron Soloveichik who Paskined that if one says the Birchat HaMedinah, one should omit that phrase. Nonetheless Yom Ha'atzmaut it is a day to be celebrated. Rav Ahron actually said Hallel on that day (without a Bracha) - for which he provides sources in Halacha.
However, R' Ahron also held that Hallel should be said on the actual date of 5 Iyar. Which this year is tomorrow (Friday). That the celebration was moved ahead to today (Thursday) by the Rabbanut for purposes of avoiding potential Chilul Shabbos is a good thing. But irrelevant to when we should say Hallel. I will be observing it then.
But it is never too early to congratulate Israel for the incredible achievement of creating a haven for refugees of the Holocaust, building a modern state quickly - thereby enabling the greatest number of Jews studying Torah in Jewish history. It's just too bad that this feeling is not universal among observant Jewry.