In order to clarify the discussion for the easily riled, we are talking macro, not micro-evolution here.
This is a very common statement amongst crationists. Macro-evolution is micro-evolution plus time. If any creationst wishes to assert that there is some boundary beyond which a "kind" cannot evolve, than it is up to them to propose what universal mechanism it is that stops evolution at that point. No such mechanism has ever been found, or to my knowledge, even seriously proposed.
It is the equivalent of someone claiming that water cannot erode a rock. When a geologist takes him to a deep canyon eroded by a river, the erosion denier says "That isn't proof that the river created the valley. No one has been around for ten thousad years to observe the entire process, so therefore my claim is as valid as yours!"
So the geologist sets up an experiment where a stream is diverted over a rock bed. After ten years, both return to see a six inch gully is cut where the stream has been flowing. "Ah," says the erosion denier "but that's MICRO erosion! I always believed that. But a river can never erode more than four feet total of rock! That would be MACRO erosion! Anyone that can cross the street at a green light can see that macro-erosion is impossible!"
We have evidence of "macro" evolution in the fossil record. We have it in genes. We have it in DNA. We see evidence of it in vistigial legs on whale calfs, vistigial tails on humans, vistigial organs throughout the animal kingdom. If the creationists wish to assert that "micro" evolution happens but "macro" evolution doesn't, than it is up to them to counteract the mountains of evidence from all the earth sciences.