Wikimedia has indeed an outreach problem in Arab countries and communities. This was a major consideration for having Wikimania 2008 in Alexandria, Egypt. I remember there were two or three great bids, so this outreach issue became rather prominent, namely where in the world Wikimania would be more effective in terms of outreach. The Egyptian community of Wikipedians benefited indeed from the effect of Wikimania 2008, but I didn't see much effect on other parts of the Arab world.
I was interviewed about Wikipedia earlier this year by BBC Arabic (despite its UK affiliation, most reporters and editors there are from Arab countries). The result was not too flattering to Wikipedia, and believe me, it wasn't because something I said. Furthermore, while I was interviewed (in Arabic) as an Israeli Wikimedian, my Palestinian counterpart was not a Wikipedian, but rather head of a Palestinian bloggers' society. Generally speaking, Wikipedia and other Wikimedia projects are popular among Israeli Jews at least as much as in Western Europe, and many of them contribute in more than one language. This is evident from the size of he-wp which is quite amazing considering it is a language of some 4 million native speakers in one country. On the other hand, Israeli Arabs, Palestinians, Jordanians and other Arab-speaking communities in the region are much less acquainted with Wikimedia, or alternatively are a bit suspicious toward these projects. There are a lot of explanations to that, and I'm not going to get into it here.
Haifa was chosen for various reasons, outreach in the Middle East was not one of the major considerations, as far as I know. We knew there were going to be some difficulties for Egyptians (for example) but the 25-January events were not expected, and they created further unforeseen difficulties. On the other hand, Palestinians and Jordanians can reach Haifa these days quite easily, much more easily than other places in the Middle East and worldwide, so we indeed hoped to see more of them registering. The entire website, including the landing page and the registration form are available in Arabic. The call to attend the special locally-oriented track is also translated into Arabic. Arab cultural institutes in Israel and the Palestinian Territories were notified several times about the event. Specific individuals who might be interested were asked to spread the word. That is about the best we can do.
Dror K