Quantum cryptography is completely and fundamentally secure in theory. However, real world devices don't behave quite like their theoretical counterparts, and this can create flaws in real world systems. The idiot journalist did get at least that much right.
A big part of research in quantum crypto these days is finding holes in real-world implementations so that we can build future systems without those holes. Kurtsiefer's group had done just that. He hasn't broken quantum cryptography, he's helped make the real-world implementations of tomorrow more secure. This evolutionary improvement of a technology in its infancy has happened again and again, and idiot journalists insist on reporting that "QUANTUM CRYPTO HAS BEEN BROKEN" every bloody time.
Now, for those of you wondering what good QC is if we can't trust real world implementations, here's the gist of why, even though we'll probably never finish making them better, they're still worth using.
If you send a message via conventional factoring based crypto, like RSA, that message must be viewed as being made public with an undefined delay. Even without quantum computing on the horizon, decryption algorithms are improving at a steady pace and making it possible to crack messages encoded in this way.
For example, look at crypto algorithms like DES that, ten years ago, people thought would take thousands of years to crack given Moore's law growing computational resources. Wide freakin' open now, thanks to improved cracking algorithms. Any message sent via classical channels can be copied without your knowledge, so any message you sent via DES ten years ago could be decrypted and in anyone's hands without your knowledge. The same thing is true of anything you send via public key encryption today. Fortunately for most of us, the information we usually send is only sensitive for a limited period of time. Who cares if your credit card number is decoded in ten years? You'll have a new one.
Anyone with long-term sensitive transmissions to make has to look at other methods of encryption. That's why quantum crypto has early adopters. Now, say a hole is found in one of these early adopters systems. Are they screwed? Is the cat out of the bag? No. Thanks to how quantum cryptography works, there is no possible copy of the transmission that could be cracked with technology developed later in time, as is the case with public key encryption. Attacks on quantum systems have to work at the time the message is sent. If a flaw in the system was not known and an eavesdropper not present and taking advantage of it at the time a message was sent, it will be secure for all time. That's the difference. Public key encryption is secure for a while. Quantum encryption is secure for all time.