Here's the Speech Recognition Window in Windows 7 beta. You'll also have a volume control setting just for this function in your volume mixer.

When you first start using it, it's a good idea to start the tutorial. You'll see how to do some basic commands, like correcting words that are misinterpreted by the speech recognition system. It's easy to do. But you'll also train the system to better understand your voice. It also makes sure the volume settings are OK for your microphone. After a few minutes, you should be good to go.

Normally, it's a good idea to use a good quality headset. But I found the system worked amazingly well on an old headset that probably cost about $15.

You can control your computer using the system, such as saying "File" ... "Exit", to exit a program. And you can also dictate. If you use it in a word processor,  you may find it works very well, particularly if you are not a fast or accurit tipist.

This program is easily as good as separate programs that cost $200 a few years ago. It's definitely worth checking out.