[mstoehr]

It is true that humans do use situational context. In the cases where semantics is important and complex for understanding an utterance a computer will fail even more because it won't get the semantics or the speech signal.

On the topic of dialog, this is arguably the area that speech recognition has gained in over the last nine years. Prior to 2001 there were not many usable dialog systems and (depending on your definition of "usable") there are many usable dialog systems deployed in call centers around the world.

Most call center dialog systems have a rudimentary system asking for people to repeat things when it doesn't understand. Although, if it asks more than once the callers tend to get very angry.