iOS 5.1 released March 7 adds some new language features, but only for certain devices: the iPad 3 gets dictation in US/UK/Australian English, French, German, and Japanese. The iPhone 4S gets Siri functions in Japanese in addition to the languages provided earlier (English, French, German).
I don't have devices with these features, but I understand that for Siri the language is selected in Settings / General / Siri / Language. Also the keyboard should be set to the language being spoken. Internet access is required.