Okay, okay, so we screw up sometimes too. Like I said yesterday, it's easy to laugh at the people who do these things, but sometimes it happens. Demonstrating speech is much harder than using it.
I don't know much about this particular incident. My team is often asked to do Vista demos (I show it off to somebody on my Tablet just about every day), and yes, sometimes the speech recognition fails. Heck, if it were perfect right now we would ship it! It's too bad we don't make the news for the thousands of demos we do that work flawlessly.
Speech demos in front of a large audience are particularly tricky because the acoustics change from when you did your rehearsal (in an empty room) to when it's showtime (lots of people). There are plenty of ways to make up for that, of course and the best way is to have a good close-talk microphone. But even then, sigh, something can happen.