There is an interesting new bot available for Windows Live Messenger that provides translation between English and several other languages.
Simply add "firstname.lastname@example.org" to you Windows Live Messenger contacts, then send a message to Tbot.
Tbot will ask you what language you want to translate from and to and then respond with translations when you type.
This is very cool, even though it is still a bit clunky. However, I can see a time in the not too distant future where the translation service will be server side in the corporate instant messaging products. Imagine a US based employee chatting with an employee in Spain, with both parties typing in their own language. Or an English speaker collaborating with a business partner in China via instant messaging with real time translation. It does not seem that far fetched, does it?
Now ask yourself - what about speech? Today we can turn speech into text with a fair degree of accuracy. We can also translate text from one language to another and we can synthesise text back into speech. How far away are we from two people having a real time spoken conversation in which each participant speaks their own language and hears a translated version of the other party?
I believe it will happen one day.