Some time ago, I wrote a review of Skype version 1.0. Since then it's moved on a long way with many new features.
Skype is one of those products that just keeps getting better. Originally I complained that Skype 1.0 lacked video capabilities, but this is no longer an issue, at least for Windows 2000 and XP users. I don't actually use the video features all that often, but they work, and don't disrupt the voice conversation.
One of the best new features is the ability to send SMS features to a cell phone, and if you register your own cell phone, recipients can reply, and you will receive the messages on your own phone. This is not a free service, but as always with Skype, the charges are reasonable, and better than the conventional phone providers.
Skype profiles are improved so that it is possible to see the local time for each of your contacts, which is handy if you've got contacts all around the world.
A Skype addin is available for Microsoft Outlook to integrate with your address book, so that you can select a contact and call them direct from Outlook.