My sticking point is consciousness. I don't think it's an illusion; I think it's both real and essential to intelligence. And we have no idea what it's made out of. We can break it. We can characterize the hardware conditions under which it works. But build it? No, that's completely beyond us, and I think it will be for many centuries. We don't even know where to properly start.
I had a pet rat, once. I think it was conscious, in a very small way. It visibly related itself to the world. When they can convincingly simulate that level of alertness and presence, when they can build a machine that appears at least as conscious as my pet rat did -- when they produce the tiniest amount of genuine gold -- I'll concede the singularity may be on the horizon. Until then, I'm a skeptic.
What I don't think we are close to understanding is how to actually make practical self-improving optimization processes and especially ones that are actually beneficial, rather than detrimental, for humanity. I feel like we are just getting started on this. If progress is going to be made at the rate that Kurzweil has predicted it is going to take more than just faster processors and better supporting software infrastructure.
Kurzweil seems to think it's close out of hope. I think he's just insanely afraid of dying.