You're the one invading the country, and it's your people are taken as hostages. It's a no win situation. What else is there to do but negotiate? Unless you want more of your people to die, it's better to pull out your troops from Iraq. Not only innocent Iraqi civilians will live, but also there would be no more hostages killed etc and the number of casualties will dwindle down.
How can they stop bombing American tanks etc? Their country is being invaded by a foreign power. They can't just shut up and let it be, of course they have to fight against it. They won't give in, and personally I don't think they should. It won't happen.
I don't think Saddam is a good man at all, but I also honestly don't think the US wants to help Iraq. That's naive.