Have you tried just talking into the webcam's microphone and seeing if anything comes out of your speakers when the mic isn't muted?
Have you tried another program like NetMeeting?
Have you updated the camera's drivers (although that's a long shot)?

Try this before anything else:

Start -> Run.
Type "sndvol32" -> Click OK.
Go to Options -> Properties. Make sure the "Recording" radio button is selected and make sure that the "Microphone" checkbox is selected. Click OK.
Now, make sure the radio button under the slider for Microphone is selected. If it is, then you have a more complicated problem... lol.