Quick summary on Spider-Island: Jackal returns, working with a spider powered lady known as the Queen. She can control arachnids. Jackal is an expert on the genetics, biology, and capabilities of human/spider hybrids. It's a match made in creepy web cocoons. He starts infecting New York, giving all of New York the powers of Spider-Man. Except Mary Jane. Turns out she was exposed so heavily to certain fluids containing spider remnants she's built up a resistance. Go figure. Naturally, this is bad because not JUST law abiding citizens get the spider powers. Jackal's put together a gang of spider powered thugs, giving them old Spidey costumes to commit crimes in. Because he's wily like that. Also, he's got two big Man-Spiders, created from unknown hosts. Because, again, he's wily like that.
So the criminals of New York start committing spider-crimes. Spider-Man goes in to stop them, figuring his expertise with spider powers will give him an edge, but when other heroes intervene, he has to leave the battle since they can't keep track of whether or not he's the real deal with all the bad guy's in spider costumes. Still, he feels he has a responsibility (because, y'know, Spider-Man) to help. So he realizes: Everyone in New York is getting spider powers. So why not Peter Parker too?
Using a web (heh) camera, he sends out a message to the people of New York as Peter Parker: At the moment, the world is watching as an entire city is given super powers. And they're seeing it get torn apart by new super criminals. The Avengers can't handle this many threats, so why don't the average citizens, given all this power to even the odds? He rallies them behind him, and they turn the tides.
Just in time for the spider powers to show their side effects: Turning people into feral, giant spiders. People are immediately put into quarantine as the big brains look for a cure. They manufacture one with the help of Mary Jane, using her 'mysterious' resistance to the spider infection. However, they lack a delivery mechanism to get it out to all the infected. While they puzzle that one out, one of Jackal's Man-Spiders attack the lab where the cure is being manufactured. Spider-Man fights it off, knocking it into a vat of the cure, and out pops Hobo!Peter Parker. AKA Kaine. Whose now cured of his clone degeneration thanks to the genetic alterations Jackal made for the whole Man-Spider thing and the cure stabilizing his structure.
Having a second him around however, Peter realizes a way to deliver the cure: Thanks to one of the recent plans of Doctor Octopus, hundreds of thousands of little Octobots are just lying around, waiting to be controlled by a superior intellect. Peter jury rigs a helmet to control them, loads up the cure, and sends them out over the city, broadcasting from the highest skyscraper he can find, fighting off attacking spiders (the Queen's controlling the spiders, remember?) alongside Spider-Jane.
That goes down, Kaine jacks one of Spidey's suits and kills the Queen, everyone is turned back to normal, another day is saved. Also, everyone's naked.
The end. Least, I think that's the end. It's been a year or so since I read Spider-Island in it's entirety, so I may be remembering a few details wrong.