You're not able to do that in iMovie any longer. I'm not sure if you can do it in iDVD or not...probably so, though I imagine it's a bit more cumbersome than doing it directly in iMovie.
Do you really have to use Garageband to create chapters? I know you can create chapters in iDVD, but only in minutes...which blows. Not every song I played in my senior recital was exactly 5 or 7 minutes long.
Entering your thread title "chapters in imovie 08" as a search in Google turns up 97,000+ articles related to it, so maybe one of them has an alternate to using Garageband.