If you want to enable line-in playback in Ubuntu 11.10 (and previous versions as well) you’ve got to change a setting in alsamixer. By default line-in playback is muted so you won’t hear whatever device is connected on it. In my case it’s my Xbox 360.
Luckily this setting can be changed very easily. Open up a terminal and enter the command alsamixer. Navigate to the line bar with the cursor keys and press m to toggle mute. If it’s muted the box above it will say MM, if it’s not it’ll say 00. You can change the volume of each individual bar with the arrow keys. When finished, press ESC to save your changes