Blocks have already reached the  1 MB limit.  The block size limit is already affecting delay for confirmations. This happened to a real purchase of physical goods I made the other day, with multiple large blocks following a one hour plus block. (This was a high priority transaction.)

The real issue isn't block size, it's whether we want to cripple the transaction processing capability of Bitcoin, thereby guaranteeing that Bitcoin remains a curiosity and never becomes mainstream.