This is just totally cool and it is a great idea. Edutainment has been around for awhile, but The Sims and it's following of players just seems like a perfect match for learning a new language. They speak gibberish on a new install, but there is research being done at universities into replacing the gibberish with a foreign language that could help people learn a new language as they play along.

Ravi Purushotma at Massachussetts Institute of Technology

In Figure 1 we can see an edit in which the main interface uses data from the German version of the game, yet includes tool tip data from the English dataset, so that if a player does not know a German word such as "Kochen," s/he can leave the cursor over the word and receive a pop-up explanation which includes an English translation.

...

Another challenge in incidental learning is that materials should be personally relevant and useful to the learner (see Huckin & Coady, 1999). In a gaming environment, content is generally presented to the user because of its direct relevance to their task. Should a player in The Sims choose to ignore messages about the variable harndrang ("bladder") and any game cues (e.g., how their Sim starts running when by the bathroom), s/he would later be embarrassed when the Sim becomes unable to control him/herself (Figure 6). This would hopefully encourage the learner to take interest in and learn more about that variable.

It's an interesting article filled with Sims screenshot and diagrams and worth a read.

Tipped by: Slashdot where there is a long discussion including the first post that asks:

How lazy have we become that if it doesn't come from the TV or from a video game it just isn't worth doing?

To which I respond to the callous commenter.

"How is it lazy to incorporate learning into something entertaining that people are going to be doing anyway?"

I guess to some people learning should only be done in a structured classroom, otherwise it is dubbed as "lazy learning" and not worth pursuing.