A lot of that would depend on what you told them when they hired/contracted you. I'm guessing you're on board to do the music and sound? Did you tell them you could do the voice recording/acting as well when they brought you on? Or did they not bring that up until now? In either case you're options are going to be to sub-contract the VO out or to tell them you're not set up to do the job.

Also what is your setup? If you have a studio I assume you have some kind of recording room already. All you need beyond that is a halfway decent large diaphragm condenser mic and a pop filter. If you don't have a treated room, I would recommend something with extreme rejection like an Electro-Voice RE20. It has kind of a radio sound, but you can use it in a really noisy room and it won't pick up anything that isn't right in front of it (they're also really cheap as far as microphones go).

Typically, hwo many music sound guys also handle the voice acting?

I'd say it's fairly common for Indie games. After you work on enough VO you'll have a good sense of what something should sound like. You won't be able to size up a script and read it right in a couple minutes like a trained actor. But given basically limitless studio time plus some editing magic you'll be able to get what the client is looking for.