I've found that the speakers on my 2008 Core 2 Duo MacBook aren't being used by Mac OS X. Some applications such as Skype that output directly to the speakers work, but the system (and any apps that use the system setting) are mute.
Before you recommend blowing in the headphone jack, there is no red LED and there is nothing there. If I can hear Skype clearly through the internal speakers, it's not the headphone jack.
Running Mac OS X 10.7.5 Lion as non-root administrator user. Model identifier: MacBook4,1
Output device is internal speakers. I can hear the startup chime as well.