I've managed to get audio in and out from my laptop (playing from iTunes). I sent a post on the Arduino forum regarding this.
The main issue I have now is that the quality of sound is really bad (I mean, you can't hear what it is, it's totally distorted by noise).
That could be explained maybe by the fact that analogRead() runs at less than 1 kHz. So in the end it might be impossible to achieve something even near good.