Please note that Abdülhamid II was long gone when World War I broke out. You might blame him for the 1895-6 massacres or the 1909 Adana massacre, but he wasn't responsible for what happened during the World War. It wasn't even the ruling Sultan, but rather the nationalist Young Turks who orchestrated Ottoman involvement in the war and organised the cleansing of Anatolia.
Turkey is afraid of a few things:
- reparations (monetary or territorial)
- many of the statesmen involved with the establishment of the Turkish Republic were involved with the Armenian massacres
- massacres and expulsions continued after the establishment of the Republic
- damage to national pride and standing in the world
- possible resettlement of an ethnic minority in modern Turkey
Furthermore, it doesn't stand to gain much from admitting to the genocide, so there is little motivation for Turkey to change its stance. It would also be impossible for any politician with ambitions to be elected (outside of a few Kurdish areas) to acknowledge the genocide.
Frankly, the denialist mentality has been so engrained in the national psyche that even if none of those points above existed, it would be difficult for Turkey to engage in a dialogue about what happened to the Armenians, Greeks and Syriac Christians during the War.