When checking iSight functionality, its always a good idea to test with other applications like iMovie and iChat to see if its an application specific issue or something more serious. You can also check System Profiler and look in the USB hardware section to see if the camera is correctly identified. If the iSight camera doesn't work any applications, and it doesn't show up in the hardware profiler, you can attempt a SMC reset. If, however, the camera shows up as a Vendor-Specific device, it could very well be the driver or the physical hardware itself in which case you would need to set up service at an Apple authorized service provider or mail it in.