I know several people working on quantum computing (including my academic advisor, although I’m assisting with a different area of his research), and I don’t get the impression that people are getting discouraged at all. Quite the opposite, in fact. The feeling seems to be that there are several promising approaches to quantum computing, and that steady (if slow) progress is being made. They may yet run up against an insurmountable technical obstacle, but it doesn’t appear to have happened yet.
But I’m talking about the physics, whereas you mention theoretical CS. If you mean that no exciting new applications of quantum computing (new algorithms, etc.) have come up lately, you could be right. But like I said, physicsts don’t care – it’s already proven that a quantum computer could function as a universal quantum simulator (assuming you can overcome some technical problems like keeping the error rate low enough). That’s enough to justify its study as far as physicists are concerned (although probably not as far as funding agencies are concerned.)
While I’m generally optimistic, as a mathematician I don’t care whether the things “exist” or not. There are applied mathematicians I’ve spoken to, however, that think the current quantum noise models are inaccurate, and that noise may well grow fast enough as the systems scale that you can never really get more from a practical quantum computer than a classical one.