iChat's audio/video is pretty good but it only works with AIM/iChat users. It doesn't work with the MSN/Yahoo Jabber clients.
I introduced my mother to IM a few weeks ago and sent her a video chat request earlier this week (one way). She was amazed by the quality and sound (not that it took much to impress in this instance) but about 20 minutes in, she started worrying about how much it must be costing me (it's UK long-distance) until I told her it was all going across the internet in her usual broadband package.
Family iSight number 2 now under serious consideration.