Recent article in The New Yorker:
http://www.newyorker.com/online/blogs/newsdesk/2012/11/ibm-brain-simulation-compass.html
Here is the research report from IBM, with the simple title "10^14":
http://www.modha.org/blog/SC12/RJ10502.pdf
It's nothing like a real brain simulation, of course, but illustrates that hardware to do this is getting very close.
There is likely to be quite a long overhang between the hardware and the software...
Thanks for this. The latest research report 10^14 already appears to be a significant update on that paper.
IBM now report roughly eight times as many simulated neurons and synapses, while the slow-down has gone from ~400x real-time to ~1500x real time. That works out at a factor > 2 in hardware improvement within a matter of months. They are using a custom hardware architecture and presumably there are still a lot of optimisations to be made. It can't be very long before this can run in real time.
As said in other comments, nobody knows how to program this yet...