I just went through all of this... since I wanted to get video conf going with my mom so she could see my daughter.
Me - PowerBook, Mac OS 10.4, iSight camera, basic DSL
She - Dell Desktop, XP Home, Logitech camera, basic DSL
I tried AIM to iChat and the video quality was awful.
I am having much better luck with Sightspeed... they have both Mac and PC software, so you have to update on both ends.
I would prefer to use iChat, but this is working much better for this particular video conference.
I spent about $75 and got a higher end Logitech camera with echo noise cancellation... makes a big difference.