There are not many places for Middle Eastern food in Chiang Mai. In Bangkok there's the Sukhumvit soi 3 area that has an abundance of Arab food places. In Chiang Mai there are a couple of Arab restaurants, but they don't seem to be doing that well.. Which is a shame, because I think Middle Eastern food is a great break from the usual Thai and/or Western fare. Jerusalem Falafel is Israeli of course, though many of the dishes are best described as 'general Mediterranean', throwing in also some Greek and Italian favorites. Noting the similarity between Israeli and Arab food I just can't help but wonder why these people don't get along better. :-D
Anyway, Jerusalem Falafel is an excellent place. The salads are great, and another 'must' is the set of 'meze' dishes with pita bread, a collection of dips & sauces (most notably hummus and tzatziki), grilled meats, cheeses and falafel of course, the ground spiced chickpea balls that gave this place it's name. Eating 'meze' style is best enjoyed with a group of people so you can order lots of different things. If it isn't already obvious, there are also many options here for vegetarians.
Prices are pretty moderate, most dishes are in the 70-80 baht range, including the Falafel & hummus pita bread shown above.
Jerusalem Falafel is on Moon Muang Road, just South of Thapae Gate.