Lot of good advice in this thread, including some good advice that disagrees with other good advice
Something else to chew on is this: I find that oftentimes people who are shy about roleplaying (particularly including "newbies" and "munchkins") are shy because they believe that all roleplay must consist of improvisational theater dialogue. Which they often suck at. If you think that this may be your problem then consider trying to show your players that there are other ways to roleplay (roleplay being defined here as expressing your character's unique traits for the entertainment of yourself and your friends)
Roleplay through description: Many characters who might not be so good at dialogue may still have a very good mental picture of what their character looks like. Encourage them to get that out. A nimble elven swashbuckler with a rapier and a stocky dwarf with a battleaxe are two very different characters and they can express their differences just as easily by playing up how they move, their body language and their fighting style as they can through witty banter about the superiority of elves vs dwarfs. Remind your players that combat is abstract, a single attack roll may encompass a great deal of action or not, and encourage them to make up any details they like to describe their characters actions so long as they don't alter the actual outcome of rolls. For example: the elf makes two attacks against the goblin, the first hits but doesn't kill the second kills. "I deftly sidestep the creature's spear thrust and in the same lightining quick motion my sword arm lashes out and I stab the goblin in the throat, with a quick flick of the wrist I slice his throat wide open." Does it matter that he basically described two attack rolls as the same action? Not a bit. Now the dwarf: "the little runt's wild spear attack glances off my armor as I lunge inside his reach, I slash him across the belly and as he doubles over in pain I raise my axe high and bring it down with a powerfull stroke that finishes him off." Now not every action needs description like that, combat would take forever if it did, but a little can go a long way. You can begin by describing the PC's and NPC's actions yourself and then as time goes on start asking your players to describe themselves like you have been doing with the eventual goal of letting them describe all their own actions. A key here is instead of describing the result of each roll as it happens begin each turn by resolving any rolls that need to be made then after you know what happened go back and describe how the entire turn happened. As an added bonus it relives you, the DM, of the burden of describing each play by play.
Roleplay through "internal" monologue: Many novels and stories take time to showcase a character through second or third person descriptions of their thoughts and feelings that normally wouldn't be visible to another character observing in the same universe. Many players who might feel self conscious engaging in first person dialogue might be ok simply describing their character's reaction to a situation. Example: dwarf vs goblin "disgusted by the loathsome creature before me I grip my well used axe tightly and charge into battle against the enemy of all my kin". There is no way the other players could know what the dwarf is thinking but that doesn't really matter as it mkes the fight more exciting and less routine. If you do decide to use some sort of roleplay award (poker chips, whatever) then remember to reward players who choose to roleplay this way as much as you reward the amatuer actors in the group.
Personally I find these sorts of roleplay to be far more intresting than 20 minutes spent in character discussing the weather with the shopkeep NPC. But as others have pointed out each person and group has their own prefrence. I hope you can find a happy balance for your group. Good luck!
