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It sounds pretty cool to me. From PS3Fanboy:

Just when you thought you knew everything you could about Media Molecule's upcoming world-creator game LittleBigPlanet, we find something else that blows our minds and makes us anticipate the title even more. In the latest Edge magazine, it's been revealed that in addition to the emotions and such your sackboy (and sackgirl) can perform, there are plans to lip-synch voice chat. That is to say, the characters will move their mouths in roughly the same way you do (even if not, it's still cool). Down the line, expect stuff like voice filters, too. We think that's a pretty stellar move.