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Skype on iPhone - Skype on iPhone
So far, so good, but the bad news is that voice calls are currently limited to Wi-Fi as Edge and 3G are not supported by this version. This may be a limitation of the current iPhone OS as reports from the US say that VoIP services have been shown working over 3G on iPhone's running V3.0 software. This means it may be possible in the future to make Skype calls over 3G as long as O2 doesn't veto the idea.
Competitors like Truphone get around the current limitation by providing you with a low cost gateway number that you can call when you're on the move to then get access to low international rates, but Skype has chosen not to go down this route, so it's basically Wi-Fi or nothing in terms of making voice calls at present.
The other major issue is that Skype cannot be run in the background ready to pop-up when you receive an incoming call. To be fair this is not a problem of Skype, but rather one of the limitations of the current iPhone OS. At present the iPhone doesn't support multitasking, so processes like this simply can't be run in the background. However, the good news is that there will be support for background monitoring in new V3.0 iPhone OS, so hopefully Skype will be able to update the client to support this when the new OS appears later this year.
Despite these drawbacks, the actual call quality over Wi-Fi was generally very good with Skype making impressive use of the iPhone's built-in mic and speaker. A lot of the time it sounded no different than a standard mobile call. However, this does greatly depend on the utilisation of the Wi-Fi network you are using and its associated broadband connection. When there's a lot of congestion on the network calls can become a bit garbled, but then this is also a failing of the desktop version of Skype.
Calls to other Skype users are naturally free, but Skype also offers low call rates to standard numbers in foreign countries. These have remained consistently competitive with other services despite Skype's popularity. However, currently when you want to add credit to your Skype account you have to leave the application and start up the Safari web browser to log in to the main Skype website, which is a little bit inelegant.