Google released 23 translation chat-bots yesterday. You just send them a message and they'll reply back with the translation within a second, inside Google Talk or any other jabber client. List of bots:
Explanation on the language codes:
Add the bot like this to your buddylist:
This service is hosted by Google, and therefore I bet it's using Google's translation tool. 😛
Google also encourage you to create your own bots, if you know programming. 🙂 Since the XMPP protocol is open, you can find a lot information on bot-making on the web.