If you didn't know already, the latest version of Skype (v2.0) now has built-in video functionality. So if you have a webcam, you can not only talk to your Skype contacts for free, but you can also see them too! I tried this with my Dad in Edinburgh the other night and it worked great, by far the best of all the video conferencing tools I have tried.
Skype is free to download and free to use, but if you buy some credit you can also use it to for calls to regular phones. It has very cheap international call rates (the call goes over the internet to the local phone network of that country). We now use it for all our international calls. If you don't have Skype, and you do have friends, I recommend you download it. It's one of those programs that once you use, you wonder how you ever lived without it.
[btw. if anyone wants my Skype contact details, drop me an email. I'm not going to put it up for the world to see ;-)]