MIT Tech Review has a nice piece on the current quality and progress in the field of natural language processing: Computers That Speak Your Language

This is as close to a live Turing test as I can think of, and basically I'm of the opinion that it doesn't really matter that much if it can be completely hidden whether or not a machine is answering you. If we are willing to internalize the interface and simply have any kind of conversation with the system, with the plan of actually reaching a goal through the use of natural language, then I will consider the test to have been passed.
I think this position is the only interesting one in AI. The argument about consciousness and 'deep understanding' is meaningless or unnecessary. Or rather: A negative answer to the question (AI is impossible) has no bearing on the evolution of technology. A positive answer on the other hand means that we will have to think about the ethics of AI. Regardless, I think the entire debate on the possibility of AI is misguided since no general argument or argument from the nature of the human brain can successfully prove the impossibility of replicating specific observed capabilities of the human mind.
Whether sophisticated machines are viewed as conscious or not has little bearing on whether or not they can be constructed, and therefore the debate about the possibility of AI is largely a debate about our perception of the machine and not of the machines perception.

Arguments from undiscovered magic abilities of the brain (e.g. Emperors New Mind) I believe are just plain wrong.