The single biggest problem facing the transition from fossil fuel powered cars to hydrogen-powered cars is the storage of hydrogen. The energy density of hydrogen (normally a gas, not a liquid) is much lower than gasoline, so you have to compress it at very high pressures to be able to store enough of it in a tank small enough to fit in a car. In other circumstances, hydrogen stored at high pressure would be called a bomb, so how you store hydrogen in an vehicle subject to occasional violent crashes is important.
New theoretical research suggests that a breakthrough has finally been achieved. Nanostructure researchers have proposed new kinds of nanotubes and buckyballs that would soak up hydrogen like a sponge and store in safely in the molecular structure of the nanotube or buckyball--in other words, a dense storage system that is nonexplosive.
The Wired article goes on to say that chemists are confident they can make these nanosystems work, which is important. The question remaining is the actual storage capacity of a reasonably sized tank that would fit in a car; some scientists are predicting capacity could be as high as 300 miles of travel, while others think it might be lower, on the order of 100-150 miles of travel. But safe hydrogen storage is the holy grail of the Energy Economy, and that might be just around the corner.