In my long observation, the question reflects the most common reason why so many good, thoughtful people reject Catholicism and why so many Catholics lack enthusiasm for their church. The theological arguments are generally ex post facto, and the Protestant Reformation is the paradigm case. If the generality of the Catholic hierarchy and faithful in the fifteenth century had borne effective witness to what the Church actually taught, Martin Luther would not have taken so many people with him into schism and heresy. He might not even have been led to some of the theological conclusions he reached. The life of the Catholic Church in his youth just was sick, crying out for a more evangelical and authentic way of being Christian. But the Church could not bring herself to make necessary reforms until she had hemmorhaged half of the Europe she had retained after the schism with the Orthodox. The questionable orthodoxy, drooping spirituality, sex scandals, ideological divisions, even the bad liturgy in the Church today—at least in the "developed" countries—together constitute the almost the same degree of difficulty that had occasioned the Reformation. When people leave the Church now, it is not usually because they find some technical, theological argument more intellectually cogent than the actual teaching of the Church. It's because Catholicism as they experience it does not transform, or even awaken, their souls.
I have seen this in my own family of origin, but the lesson holds all over. In both the blogosphere and in conversations with sincere, thoughtful people I meet in daily life, the most common objection to Catholicism I encounter is, in effect, that the actual behavior of the Catholic hierarchy and faithful is not a credible witness to Catholicism. I am no longer content to rebut that argument with theological ones of my own, for I myself strengthen it by my own sins and failures. The Pope knows that such is where the chief difficulty lies: he often says, in one way or another, that true holiness is the most effective argument for the truth of the Catholic faith. It must be admitted that the converse also holds: the lack thereof is the most effective argument against the truth of the Catholic faith.
It isn't enough to say, with G.K. Chesterton, that the Church is a hospital for sinners and that the main reason to join her is to get one's sins forgiven. True as that is, it's only the beginning. The Gospel calls for a lot more than that. After all the theological arguments have been bandied about, that's when the case that matters to most people begins to be made.