Largest quantum computer yet: 14 qubits
physorg.com
physorg.com
EDIT: A free pdf of a draft of the paper is at: http://arxiv.org/PS_cache/arxiv/pdf/1009/1009.6126v2.pdf. A quick skim suggests that at 14 qubits the state they actually prepare in the lab is, indeed, not very similar to the state they intend to prepare, with a reported fidelity of about 50%. That's the same fidelity they'd get if they just prepared an all |0> state. While the paper reports terrifically interesting work, this and many other details in the paper suggest quite a subtle picture.
Anyway, I agree with your analysis - this is a great accomplishment, but we are still further from having true quantum computers than the news reports would make it seem.
This raises the question, what counts as "completely controlled"? What is typically meant when they say "Built X qubit quantum computer?"
You can manipulate the possibility of observing certain states by performing operations on the bits (which are effectively interference). So a quantum calculation is more a probabilistic restriction on which state you want, rather than a direct calculation. In order to be sure of a result, you need to repeat the calculation to get a desired confidence (or just check the answer directly if that would be faster).
Not necessarily, some quantum algorithms give an answer with 100% probability (like the Deutch-Josza algorithm). You're right in that the two most interesting ones (Grover's and Shor's algorithms) are probabilistic, though.
The reason for the exponential is that the bits are all in a superposition of all possible states (so for a 14-bit register, that's a superposition of 2 to the 14 states), which operations all act on. Or something like that. I'm not really that clear on the details. :(
Your intuition is correct. Quantum algorithms seem to perform better than classic algorithms because there are certain operations (like fourier transforms) that can be performed exponentially faster (as of today) than classic algorithms.
It is still unknown however whether or not we can simulate quantum computations classically without exponential blowup otherwise it would resolve major open questions in complexity theory.
I'm no physicist, and my knowledge of quantum is mostly memories of an intro course I took 5 years ago, so I hope someone with a bit more knowledge can come and fill in the gaps here. Nevertheless, the basic principle is that quantum superposition allows us to parallelise things with relatively reasonable space requirements.
Pretty sure it can't factor 35 yet, though.
Unless you know a way of extending this to handle an arbitrary amount of I/O then it's just a way of implementing nondeterministic finite state machines; which are no more powerful than deterministic finite state machines.