God no... aside fromt he fact that its plain uneconomic to start absorbing tinpot little pacific islands, it'd be a PR disaster. There goes all our credibility with the ASEAN member states, who are already not on the best of terms with us, what with the Indonesian controversy and our "reservations" to the treaty of Amity and Cooperation. Adding them as a *state* is just insanity, because I think you'd find that a racist backlash would be whipped up very quickly, and the Senate power they'd hold in our current Senate would be extremely disproportionate.
And what makes you think that they even want to be part of Australia?
i don't think that they'd get senators (christmas island doesn't have senators, or is it part of an australian state/territory?), but its alot to ask for a population to give up their sovereignety.
Christmas Island doesn't have explicit representatives; for the purposes of the Electoral Act the islands are part of the constituency of Lingiari (just as Lord Howe is in the Sydney electorate and Macquarie is in the Franklin electorate)