We use MSN messenger for this purpose. We have separate microphones, cam and speakers though of course you can get them integrated with cam and mic together. There are many choices for cam, but it works well. My family are 5000 miles away, and my daughter just this afternoon spent three hours with her grandparents on video.

Yahoo does video too and has the advantage that you can multicast your video stream. Otherwise there is nothing really that makes any one stand out compared to others.