The Land of Israel was not called “Palestine” in the 1st-century. The Romans referred to it as Judea and its inhabitants as “Jews” (regardless of which one of Israel’s twelve tribes they were descended from). The Jewish people referred to it as Israel and generally referred to themselves as Israelites – but also as Jews (to a lesser degree).
The Land of Israel was re-named by Caesar Hadrian in the aftermath of the Bar Kochba Revolt (132-135 ce). He called it Syria Palestina—and connected it to the Roman province of Syria (See my “Israel: A Brief History of Conflict” Seminar when available). Because the Bar Kochba Revolt “shook” the Empire, it was repressed in a very brutal and far-reaching way. See BAR, Sept-Oct 2007, Vol. 33, NO 5.
Hadrian chose the name Palestina as both an affront to God and a way to shame the Jewish people—he named the province after Israel’s “arch-enemy,” the Philistines. By the way, there is no connection between modern “Palestinians” and the ancient Philistines (apart from their hatred of the Jewish people).
This may not seem like a big deal, but it is at the “heart” of the “debate” over the language that Yeshua spoke because it reflects a deliberate (and successful) effort on the part of the early Church fathers to “de-Judaize” Christianity (see my “A Brief History of Anti-Semitism” Seminar which will be available soon).