Jorge Castillo is working on a speech synthesizer for the Commodore C64. A few months ago he made a hardware version with a PIC micro-controller. And now he made a software version using the SID chip inside the C64. The program is specially made for the Spanish language, but because it uses phonetic sounds it will also work with other languages. You can read more about his project in the Retrocomputacion forum.

English translation of the web page.