Can the characters speak?

Yes.

You can record the dialogue yourself or use pre-recorded audio files, and your characters will automatically lip-sync.

Text to speech is supported in Photostorm and Greetingstorm, but not in Moviestorm itself. This will be added in 2010.

There are a number of free text to speech systems which you can use to generate audio files and import into Moviestorm. There's a list in the forum of free software and other resources, maintained by our users.