It took a while but Skype for iPhone has finally hit version 3.0 and now includes video calling, not only over Wi-Fi like Apple's FaceTime but over 3G as well! Here's the complete update list:
We're testing it out now and will update asap with results. How's it working for you?
UPDATE: First impressions after the break!
Skype for iPhone 3.0 with video calling it works well. Over Wi-Fi it doesn't look as good as Apple's FaceTime but it looks good enough and the ability to connect to Skype users (whose numbers eclipse FaceTime users) makes it killer. Over 3G is looks about the same as Wi-Fi, which is great because FaceTime forced onto 3G via Jailbreak hacks like My3G doesn't look as good.
I tested it out with Brian Tufo and it was solid on both ends, Wi-Fi and 3G. When in Wi-Fi I could still hit the Home Button and put the call into background mode but the video froze on the other end. My iPhone was pretty slow and by the time I made it to Settings and flipped Wi-Fi off, then went back to Skype we'd lost the call but Brian was able to call me back over 3G easily enough.
UPDATE 2: For those asking, Skype over 3G used an average of 2.1MB of data up and 1.3
Overall Skype for iPhone 3.0 with video calling is solid.