Yesterday, Microsoft demoed a telephone conversation where one person spoke in English and the other in German, and the computer translated to the opposite language so they could have a conversation. This is very cool, and accurate enough to have simple conversations. From the YouTube description:

What if your computer could transcribe and translate, in near real-time, a phone conversation you're having with someone speaking a language you don't understand? That's the promise of one prototype demonstrated by Microsoft researchers today during a preview of the company's annual TechFest event.