I have the same issue - loaded Snow Leopard and now no audio. When I press the volume button on my iphone, it says "ringer". I've set the audio input under settings on the computer to the internal microphone, turned volume all the way up and disabled ambient noise filtering. Computer is not 'sleeping' or in screen saver mode. Audio was working fine before Snow Leopard upgrade. Output volume on iMac is at 75%.
Please help - thank you!