The way I understand it, it's only illegal if a third party records the conversation without the other two parties that are involved in the conversation knowing that they are (or could be) recorded. I think the legislation was enacted primarily to protect citizens against police power (e.g., not allowing police to tap your phone lines without a court order).
So, let's say, can you put a tap on your neighbor's phone line and listen in to your neighbor talk to other people? No, that would be illegal.
However, can you, say, record all your phone conversations you have with someone that you think is suspicious or scandalous (e.g., a crazy ex-girlfriend) and not tell that person about it? Yes, that is completely legal.
My two cents.