You need to click the little microphone icon - sorry if you've already tried this.
Edit: Aha! Update to 8.0.552 and presto... Mic icon. Very slick.
Edit again: "Hello" ---> Lowes. "Hello Mr. Webpage" ---> homeless services "This is a test" ---> test
Probably a crappy notebook mic to blame. Ah well. Recognition on my Nexus One is quite solid so I can't blame Google's algorithms.
(It seems this feature must have just been pushed; it was less than a week ago when I last restarted.)