Fueling some of the arguments against hydrogen is the energy cost for creating it. In other words, a dirty coal-fired electrical plant generating the power required to create the clean hydrogen through electrolysis reduces the system-wide benefit of hydrogen.
There are many approaches currently under investigation for the creation of hydrogen from renewable energy sources, or by cleaner non-renewable processes. This DOE site provides an excellent overview of the current work underway.
The current issue of Small Times reports on nanotech work by Los Alamos National Lab that boosts the efficiency of solar cells by up to 37%, for an overall efficiency of more than 60%.
Such developments in nanotechnology and photovoltaics represent one of the key enabling areas described by R. Smalley (earlier post). This is moving in the right direction.