I was 3000 miles away from my family for 2 months and used SKYPE video for free for hours every day. It blew away uning a simple phone. My kids just kept me on every night and it was like I was sitting in the family room with them every night just like I was home.
Let me spread some good karma since I have done the same for the last 2 years. You need a good ISP. Good to speedtest.net and use the ping test as well as speed test. This will tell you your quality. I have A quality, folks in Europe have C works fine. Need a computer, dual core preferably, skype, good web cam, and you should be good to go. I would suggest no less than 1 mg up and 1 down. It's amazing how good the video to Europe from Denver is if everyone has good equipment and infrastructure.
Simple cable modems each end. A $250 Acer Aspire with a built in web cam on my side and my son's Macbook at home. I was on assignment in San Diego for a few months while the family stayed behind in New England. My son just put his laptop on my chair in the living room and I would stay online for hours at a time just like I was home. This made travel so much easier on the kids. I also use Skype to call family who are in the Middle East. My son's new phone has unlimted 3g for $30 a month. It won't be too long before everything is Voip over 3G at a set montly price less than cell phones cost now.
The bandwidth that your ISP provides is what's most important for skype. Doesn't really matter if you have 1G or 3, but you need to have a wide bandwidth. Some cheap providers will squeeze the bandwidth dry but still provide high speed. It's okay for browsing website, but if you want to make a streaming connection, you need high bandwidth. Also, use from a computer with a direct line and now WiFi. The WiFi has bandwidth problems as well. Last thing, experiment with different headsets. The right head set can make all the difference.