I purchased a Logitech camera a few months back pretty cheap after rebate, and now had an opportunity to use it with Skype. The allure of free skype-to-skype video phone calls is alluring, as well as $29.50 a year for unlimited USA skype-to-any landline phone calls. Not bad.
The great thing is that for callling Japan, it is only $9.95 a month, UNLIMITED Skype-to-Japan landline. Wow! How's that for keeping in touch???!!!!
Free download, and just need a cheap webcam: I recommend the Microsoft VX-1000 for $22, a bit more if you have to buy and ship. No need to go too fancy for megapixels, as you want fast streaming/compact video.
Gmail also just announced free video phone/messaging service, too. I will try that later, but I like Skype for the computer-to-landline paid service (but extremely cheap!!!).
Just note that if you are considering ditching your AT&T landline, then you will need a cell phone for 9-1-1 service. Computer phone companies can't reliably give that service, especially if your electricity is out, or your computer just crashed. But for most of us with cell phones, it may be time to ditch the wired phone to the wall, and just go cell/Skype combo.