^this.
When you plug something into the headset jack, the phone looks for the mic feed from whatever you have plugged in. So, if you are using a normal stereo connection, then you won't be able to talk. You can probalby find an adapter to connect both a mic and the cassette adapter in to the jack on the phone.
It doesn't make sense though, because other phones (droid and iphone for example) don't have this issue. If the headphones don't have a mic, it doesn't disable the phone's mic. I don't understand why this particular phone can't tell the difference, or its software just isn't set up to differentiate.