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Android's voice search also does things in the cloud. It's not bad, actually. I can say, "Email Alex. Subject Hello. Body Hi Alex, how are you [question mark]" and my Xoom will open the gmail app and fill out all the fields in about 3 or 4 seconds.

I imagine Apple will be approximately the same.

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A lot of the rumors seem to indicate that it's an iPhone 4S feature because of processing power requirements. It sounds as though there is a lot of processing happening on the device. It goes to the "cloud" for looking things up that aren't on the device itself. Wikipedia, Wolfram Alpha, Weather, etc.

I'd imagine they down-sample the audio like crazy. They certainly don't need CD quality sound for it.

the standard is 8kHz-16kHz, 8-bit PCM. higher frequencies are of limited utility in recognizing human speech.

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