Cellulose is the only way to go
To borrow an old joke: Cellulosic Ethanol is the fuel of the future -- and always will be.
From a chemistry or molecular biology perspective the concept looks great -- similar Hexose sugar units are in Sugar / Starch / Cellulose, so why not use the most abundant and cheapest material? The problem looks different from the perspective of evolutionary biology, however. Naturally occurring Cellulase enzymes, sourced from a wide range of different organisms, have each undergone a long process of optimization through evolutionary history. Yet every enzyme remains extremely slow and inefficient (compared to enzymes that process sugars and starches). Why is that?
I believe the reason is that Cellulose (or rather, the Cellulose-in-Lignin composite matrix that plants use) is the end result of a very long evolutionary arms race between plants and their consumers. It has evolved to be resistant to microbial degradation -- never totally resistant, but just tough enough to ensure no critter gets a free lunch out of digesting it.
Of course, not all Cellulosic Ethanol need be derived from purely microbial techniques; chemical and chemical/biological hybrid processes might break the evolutionary deadlock. Others have suggested engineering the starting material itself, starting with plants designed to produce more easily digestible Cellulose (which brings up the problem of how well they would defend themselves against insects and pathogens). Unfortunately, in each of these alternate solutions, the amount of work needed is enormous, and it is possible we are simply out of time, with regards to the funding for this sort of research.