I didn't write they are a "failure", I wrote that they aren't good. And Hansen's 1988 models are beginning to show that they weren't good enough in modeling reality. That's no big deal to me, but climate scientists (and hence also sceptics) still seem to think it is - otherwise it wouldn't be a topic every year at Real Climate. And not much surprise there: Schmidt works for Hansen.

And no, the argument that scenario C matches global temperatures, doesn't hold water. Because scenario C was based on drastic reductions of atmospheric greenhouse gasses between 1990 and 2000. That didn't happen. In terms of greenhouse gasses exhaust, we follow scenario B. (Hansen first calculates how much extra forcings the earth will get, and bases temperature projections on these calculations.)

So in forcings we track Hansen's scenario B, but even without reductions in GHG, the global temperature barely reaches the line of scenario C at this point. Still, as previously said, we actually can't be really sure about this as the picture doesn't include standard deviations.

Even the recent Real Climate post you link to admits that Hansen's preferred scenario, B, is running out of sync with measurements. (Actually, Hansen stated in 1987 that he was thinking it would turn out to be in between A and B.)

Therefore, the issue is climate sensitivity. Again. It's the single most important figure in climate science, and it is not settled. Despite Gavin's proclamation that the earth's sensitivity lies around 3.3 degrees C, discussion about that figure is far from over. That's the figure the Hansen camp prefers at the moment. (And Hansen's estimates have been climbing down since 1988.)