The Nexus One has a secondary microphone on the back that is used to detect ambient noises. This ambient sounds recorded here is then used to process the sound recorded by the primary microphone at the bottom and to produce a less noisy output for the listener at the other end of the call.
CNET performed an unscientific test on noise cancellation technology used in mobile phones claimed by the manufacturers in this short video which included the Nexus One. What they should have included is maybe also a test with a phone that doesn’t have any noise cancelling technologies built in.
CNET Challenge: Does noise cancellation work in mobile phones?
I personally have found the Nexus One’s voice capture pretty good when I hear my wife on the other end. We just got a Nexus One for her recently too. It has always been because my location was too noisy for me to hear her rather than her location being too noisy for me to make out what she’s saying. So for me at least, it does work.
Ps. Wife was using the HTC Touch Diamond and HTC Touch Pro before the Nexus One and there definitely have been many times I needed to say “huh” even when I am in a quiet place.
Source: http://asia.cnet.com/tv/specials/misc/0,39067331,45232019p,00.htm
[...] and I really wish it was on the Desire (Google Nexus One – Noise Cancellation Microphone #win / My Nexus One and me | Noise Cancelling on Nexus One ) – Google said the Nexus One has not yet revelead all his secret, like we know for the color [...]