1. Reset PRAM by shutting down the computer and turning it back on again and, at the first chime, hold down the Command + Option + P + R keys (all at once) until you hear the third chime.
2. Check in the System Preferences > Sound that you actually have the Sound Input set to be the Internal (Built-in) Microphone.
3. Create a new account, with admin rights, and see if the problem with the camera and microphone still exist.
4. If all the above fail, you could try an Archive and Install using either the disks that came with your machine or the OS X installation disk, whichever is the more up to date.
Once the A & I has been completed, check to see if the problem is still there. Then bring the system back up to date with Software Update.
Let us know how you get on
My iMac's Microphone and Webcam aren't working... I bought it just over a year ago, I did not get Apple care, and it is no longer under warranty (as of a month ago today). I would like to get it fixed, but I don't know what the best option would be for me. Any suggestions??