The GSM algorithm got cracked last month, and now security experts also broke the 3G encryption. All it took them was a couple of hours on a regular computer.
The original algorithm intended for UMTS is called MISTY1, but was too computationally intensive, so it was replaced by a revised version called KASUMI (Japanese for "mist"). The new algorithm was supposed to be easier on the hardware, but not any less secure.
It turns out that's not the case. An attack on the algorithm takes just several hours on a regular computer to break the encryption. So, it doesn't enable real-time eavesdropping (at least not using a single computer), but the researches that broke the code say their implementation wasn't optimized, so there's probably room for improvement.