Jiraiya vs Itachi

Viz, "Kisame: Even if you might be able to take him on, I'm not so sure about me...He's in a different league.

Itachi: Yeah... If we faced off, we might end up killing each other. At the very least, we'd hurt each other badly...And even if I had more backup, it probably wouldn't change the outcome.
Kisame: It was great finally finding him at the ramen shop, but... His babysitter was one of the three great shinobi of Konoha legend. With him as our enemy, even the titles Konoha's Uchiha clan and seven ninja swordsmen of the mist pale in comparison.
Itachi: Yeah... However...Even the strongest heroes have their weaknesses..."
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Jiraiya: How did they get out?...And what are these black flames?

Jiraiya: Humph. If you go now, you'll just be killed...There's too much of a gap between you and them. I mean, it even took me a huge effort just now...To distance them from you.
Naruto: Are you saying that I have to keep running and hiding from them for the rest of my life?! Live each day shivering in fear?!!
Jiraiya: Shut your mouth.

Kisame: Why did we have to retreat...? With your power...
Itachi: There's no need to be impatient... None. Besides which I must also... rest my body in one place for the foreseeable future. For not only Tsukuyomi, the nightmare realm... But I was forced to use the Amaterasu as well...

ShounenSuki, Kisame:
「アナタならどうにかこうにかやれる相手でも私じゃあ 分かりませんよ…」
「次元が違う」
"You might be able to somehow defeat him, but me, well I don't know..."
"Our levels are too far apart"

Itachi:
「ああ…やり合えは二人共殺されるか良くて相打ちというところ」
「…たとえ人数を増やしたとしても変わらないだろう」
"Yeah... If we fought him, we might both be killed. If it goes well, we might take him with us."
"Even if the number of people were to increase, this probably wouldn't change"

Kisame
「ラーメン屋で　やっと見付けたはいいが…お守りが　あの゛伝説の三忍゛とは」
「彼が相手では゛木ノ葉のうちは一族゛も゛霧の忍刀七人衆゛の名もかすんでしまう」
"It was good we finally found them by the ramen store, but... his guardian is of those 'Legendary Three Ninja' "
"He, as an opponent, makes 'Konoha's Uchiha clan' and the 'Seven Shinobi Swordmen of the Mist' seem like nothing."

Itachi:
「ああ…しかし……」
「どんな強者にも弱点というのがあるものだ……」
"Yes... However......"
"No matter how strong a person is, he is bound to have a weakness..."

Why it's not Kyuubi they are referring to:

 ShounenSuki
"If they were on any level apprehensive about Naruto's strength, they wouldn't have knocked on his door and asked him to come with them. They'd have found a far better way to capture him.

And you're right, Kisame does say something along the lines of "But... this child is the Kyuubi hmm". This brings me to another point. They knew who Naruto was before their conversation. They had seen him and Jiraiya at the Ramen shop. They should have had intel on him as well. There is no way they would have thought him so amazingly powerful, the both of them wouldn't be able to defeat him. 

Seriously, first they are almost certain they would die if they faced him, and then they knock on his door, stand there in the door opening seemingly without even expecting the need to fight, and ask him to join them? Not only that, but Kisame, who thought he would be defeated, was apparently sure he could easily dismember Naruto. At that moment, he had just as much information on Naruto's abilities as he had when he saw him at the ramen shop. Why was he suddenly so confident?"

Gottheim 

"I insist that the way the conversation goes down makes it look like they're talking about Naruto first, only to bring in Jiraiya later as Naruto's caretaker and a threat in his own right. This is evidenced by the way njt and Viz translated it.

However, I did what I always do when I can't conclusively settle an argument or understand something. I went through the Japanese Internet (2chan, among others) to see what they think. The general consensus there seems to be that the whole conversation was about Jiraiya, not Naruto (Kyuubi) then Jiraiya as I thought.

They do have a problem with it, but it has to do with the contradiction between Itachi's claims that Jiraiya could handle Kisame+Itachi+reinforcements and Orochimaru saying that Itachi surpasses him (which is kinda reminiscent of a certain "Back then, he saw through everything I did"). To say nothing of the feats that have been displayed in the manga, which effectively put Jiraiya a cut above the rest of the Sannin and more or less on par with Itachi. Slightly below or above him, depending on which side of the fence you sit on.

This effectively settles the argument in the opposition's favor. Those who said it was all about Jiraiya were actually right, and I now I get to eat crow"

Detailed Write up by myself:

http://www.narutoforums.com/showthread.php?t=654261