People have often discussed this issue with me. Of all the articles I have read thus far I have been most convinced by the arguments made by Dr Sherman Jackson.
Here is a paragraph from the conclusion of the article:
I have argued that Islam is a religion of peace. I have based this argument on the assertion that a prevailing “state of war,” rather than difference of religion, was the raison d’etre of jihad and that this “state of war” has given way in modern times to a global “state of peace” that rejects the unwarranted violation of the territorial sovereignty of all nations. Assuming the factual verity of this “state of peace,” even Radicals like Sayyid Qutb could be convinced of the veracity of my argument affirming Islam’s fundamental commitment to peace. Ironically, however, it is precisely here that a super-power like the United States is put in a position to contribute directly to the Muslim valuation of jihad in the modern world. Lamentably, U.S. actions such as the 1999 bombing of Sudan and Afghanistan, its acquiescence in the face of Israeli incursions into south Lebanon and the Occupied Territories, its talk of an impending invasion of Iraq and its sabre-rattling with Iran all undermine the credibility of any presumption of a new world “state of peace.” Still, I would argue, these unfortunate challenges notwithstanding, the principle of territorial inviolability continues to enjoy general recognition throughout the world community. And it is this general recognition that sustains my commitment to the doctrine that Islam is a religion of peace.
(Full article at: http://users.tpg.com.au/dezhen/jihad_and_the_modern_world.html)