The question is: Is illusion real or suffering real. What does Kabbalah say about this?

First of all to clarify the term Kabbalah. It is not a religion with dogma. That is, it does not espouse a particular point of view from within itself. Those who study what is called Kabbalah, study the Zohar, Torah, Mishnah, etc in the pure sense of these works of Judaism. In the broader sense all forms of revelation are under the auspices of Kabbalah. This is because Kabbalah in itself means to receive and to receive in a very special manner, the light that is always being offered by our creator. Everyone one who responds here is taking part in this Kabbalah. No one can speak for or is the authority on Kabbalah. Such claims are ego oriented. However all of us can add to the openings which produce the light or the connection between ourselves. All of this is a preface to your answer so that you may understand this process and its incredible simplicity. You ask a question. The answer is always there. Consider that it is coming from within in response to your query. The only purpose that my answer reveals is our connection and the extension of light. With all that said, he we go.
"Kabbalah" says change your mind, change the movie, live in the 99 percents world. This means that by our very own intention is the world around us formed and yes seen before our very eyes.
Think of the caterpillar in the cocoon. One day he is crawling and then sometime later he finds himself flying. What changed? Everything. The perception within became that of a soaring flying creature even while he was crawling around eating the leaves in my garden. As he started thinking about this soaring lighter than air creature he would become, he gave up his crawling life and through the cocoon of his dreaming soaring soul was reborn into flight.
As far as illusion and suffering is concerned, you are not the crawling limited creature but are entering into the cocoon of your awareness which steady and surely transforms you into the giving, loving, non-suffering being who awakens from their old life and into their new life.
The cocoon symbolizes the web of positive thoughts you weave around yourself in order to transform your being. You continue this web until you break free and realize that all along you are this incredible free creature conscious in thought, willing in love and open to every opportunity to connect and share the light. Leave illusion and suffering behind in your life and your body and realize the truth about your being. You are that butterfly. Simply continue to grow and weave your web of transformation.