Google Translate for Android now enables you to translate speech back and forth between 14 different languages.
It is available on Android market.

You have to speak into your phone’s microphone, and the Translate app will translate what you’ve said and read the translation out loud.

The person you’re speaking with can then reply in their language, and Conversation Mode will translate what they said and read it back to you.

Here's a google video:

[video=youtube;T8fsvYd2RBY]https://www.youtube.com/watch?feature=player_embedded&v=T8fsvYd2RBY[/video]