All the current crop of Macs have a FaceTimeHD camera (excluding the MacMini and MacPro which have no cameras built-in) that does support HD resolutions. Any app that supports video should support this camera.
I bought an HD webcam but it's definitely not showing at 720 quality. what could be wrong?
What are you using to compare? If you're using Skype or similar, do you have the internet bandwidth for it? Maybe the person at the other end doesn't have an HD camera?
The first thing I have to mention is that the 720p HD designation only applies to local recordings. For video chats, only VGA is supported. I think Microsoft should make this clearer as I'm sure many people think that the HD-3000 supports chatting in HD. This is not the case.