If you are using either Chrome 11 Beta or a Chrome 12 Developer / Canary version, you will notice a small microphone icon on the lower right of the translate window (we hear that this is a limited rollout and not all users are going to see this feature.)
That is actually not a bad idea as I found the feature not to work very well across different languages and only simple phrases were detected correctly. A similar features was released for Android has been available for some time, but was recently updated to support 15 different languages for voice input (new listening languages include Japanese, Arabic and Korean). Overall support now covers 58 languages, Google said.
The desktop version, by the way, only works for input in English and there is no voice output.