It's called an internal temp sensor because it's measuring the temperature of the internal chip die not the temperature of the air outside the chip. If you want to see it increase, wire a few leds to output pins and turn them on and see the temp reading increase. It's usefulness and accuracy is very limited for practical applications. In fact in 3 years I've never seen it used in any useful published project other then to show that it is indeed there and functions to some degree. Some have proposed that is could be used to seed a random number generator but that doesn't sound like a good source for a decent seed to me.
Lefty