I have no idea where to start, but having taken courses in complexity theory, quantum computing, cryptography, cryptologic protocols and quantum information theory I guess I am expected to contribute to this thread.
First the interesting topic of how fast a quantum computer is. The answer is that we don't know. There are no proof that a quantum computer is any faster than a conventional computer, and with "faster" I mean that it is able to (for example) solve problems that requires an exponentional amount of time in the problem size in linear time.
There is a quantum algorithm for solving the hidden subgroup problem in linear time, which is very interesting since that requires exponential time on a conventional computer. Also discrete logarithms and factoring are special instances of the hidden subgroup problem. The downside is that we have strong indications (although not proofs) that neither of these problems are NP-Complete so even if a linear time quantum algorithm exist (which it does) it does not tell us that a quantum computer can solve NP-Complete problems in linear time. In fact there are strong indications that it can't.
With regards to using a quantum computer to breaking todays encryption algorithms it's clear that algorithms based on factoring and discrete logs can be broken, however algorithms based on the intractability assumption of NP-Complete problems seems to remain secure against a quantum computer. Using quantum search you can search between N elements using Sqrt(N) trials, so using this on a conventional encryption algorithm will reduce the keysize by a factor of 2 (a 256 bit key will be as effective as a 128 bit key, etc.) so conventional algorithms are not easily broken by a quantum computer.
Quantum encryption works today over rather long distances (40 km or so I believe - we did a test at the university where I study). The protocol is impossible to explain without some background info first. It's easy to come up with a protocol if you have a quantum computer at your disposal, but we don't so instead a modified version of the protocol was used. It's called the BB84.
I believe that the largest quantum computer in operation today is only about 10 qbits which is useless for any interesting stuff. The quantum computer needs to be completely isolated from the surrounding universe in order to work without errors. Since this is not possible clever quantum error correction schemes have been developed, but it is impossible (at least today) to increase the number of bits without introducing too many errors. Besides that generating entangled qbits (which are often needed for the quantum algorithms) is a very difficult task (only 1/1000000 or so gives the desired result)
Finally I would like to say that the statement "8 qbit number can store a total of 256 values simultaneously" should be taken with a grain of salt. It can't store 256 values simultaneously in the way we think. It can be any number of those 256 possible values but until we read the results it hasn't decided yet and we may think of it as being all values at the same time.
If anyone's interested I can go into more details...
Edit: Here's a link to the
Center for Quantum Informatics at Aarhus University. In the bottom of the slider to the left you'll find a link to their quantum crypto experiment. There are also other information about quantum computing on that page.