Yes, you can still use audio input, but not while you listen. Uh, musicians need to be able to hear what they're playing to. On the new MacBook you can't both listen through headphones, and record through the input at the same time.
From the manual:
"Audio out port. Connect external speakers, headphones (including iPhone), or digital audio equipment. You can specify audio analog line in functionality, to support line-level microphones and audio equipment, by selecting Audio In in the Sound pane of System Preferences."
"Choose Apple () > System Preferences, and open Sound preferences. Specify whether you want the port to be used for audio input or audio output."
Thanks a lot Apple. They giveth with one hand. They taketh away with the other.
Now, just to be clear, I'm glad they added back Firewire... and I wouldn't use the built-in A/D converters for serious recording... but come-on guys.