Works fine for me. Maybe you're using a "tiny" Vim or something? What are the first few lines of your :version output?
The line 42 in my /usr/share/vim/vim73/syntax/syntax.vim is:
doautoall filetypedetect BufRead
Maybe you need to turn on filetype detection prior to turning on syntax highlight? I seem to remember someone on this list saying that "syntax on" automatically implies filetype detection, but it's worth a shot to put "filetype on" before "syntax on" in your .vimrc.
This could also be "filetype plugin on", "filetype indent on", or "filetype indent plugin on" for more features.
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