There are two different language settings here at WordPress.com: your Blog Language and the Interface Language, which are both explained below.
The Blog Language is the language in which you write your blog. Each blog has its own language setting, so if you have multiple blogs associated with your account, each one can have a different language setting.
This setting can be changed from your Site Settings page.
The Interface Language is used to change the language throughout WordPress.com and is specific to each WordPress.com account (it does not differ between blogs). The following interface languages are currently available: French, Spanish, German, Italian, Hebrew, Russian, Japanese, Brazilian Portuguese, Dutch, Korean, Turkish, Indonesian, Chinese (China), Chinese (Taiwan), Arabic, and Swedish.
This setting can be found on your Account Settings page.