It's a stupid problem, but I've found a work-around (not a fix).
Log into eLive client and run the audio wizard
a) don't worry about the audio at this point, just make sure the correct input/output devices are selected.
Install skype from the partner repository:
a) open the ubuntu software centre, and select Software Sources... from the "Edit" menu.
b) click on the "Other Software" tab and check "Canonical Partners":
c) open a terminal and update your software list:
sudo apt-get update
d) re-open the ubuntu software centre, search for skype and install (or use the terminal:
sudo apt-get install skype)
Adjust audio levels using skype:
a) log in (create account if need be)
b) open the Options pane:
c) Select "Sound Devices" from the list on the left, and ensure the box "Allow Skype to automatically adjust my mixer levels" is checked.
d) Make a test call to check your speaker/mic settings.
In addition, you may need to clear the java cache using the "Oracle Java 7 Control Panel":
a) On the "General" tab, in the "Temporary Internet Files" section, click "Settings"
b) Next, click "Delete Files..."
c) Make sure the "Cached applications and applets" box is checked and click "OK"
Now when you log into eLive your audio should be working fine.
Tested and working on Ubuntu 12.04 Precise 64-bit