Unfortunately -- you knew that was coming, right? -- Gentry’s scheme is completely impractical. It uses something called an ideal lattice as the basis for the encryption scheme, and both the size of the ciphertext and the complexity of the encryption and decryption operations grow enormously with the number of operations you need to perform on the ciphertext -- and that number needs to be fixed in advance. And converting a computer program, even a simple one, into a Boolean circuit requires an enormous number of operations. These aren't impracticalities that can be solved with some clever optimization techniques and a few turns of Moore's Law; this is an inherent limitation in the algorithm. In one article, Gentry estimates that performing a Google search with encrypted keywords -- a perfectly reasonable simple application of this algorithm -- would increase the amount of computing time by about a trillion. Moore’s law calculates that it would be 40 years before that homomorphic search would be as efficient as a search today, and I think he’s being optimistic with even this most simple of examples.

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Schneier on Security: Homomorphic Encryption Breakthrough