I've been using iChat to video chat with my family for at least 6 years. With each Mac OS X release, Apple's made nice improvements to the video calls in iChat. This app is what sealed the deal for getting my parents off Windows years ago, and more recently prompted me to upgrade my mother-in-laws iMac to Mac OS X 10.6 Snow Leopard. It's been one of my favorite Mac-only apps. Of course Skype has been an option too in recent years and I've used it plenty especially to people on Windows. In my experience though, iChat's video quality has always been better. But it is time to say goodbye to iChat for video calls and use FaceTime, it's just better for most people.
Yes FaceTime costs a couple bucks, but video quality is definitely improved because FaceTime uses a widescreen aspect ratio to send & receive video. This has always been on my iChat wish list since iChat 5.0.3 on Snow Leopard captures video using a VGA (640x480) aspect ratio (i.e. 4:3) and then stretches it for widescreen viewing. FaceTime for Mac has the ability to send & receive video calls in 720p HD, but only the new early 2011 MacBook Pros have a built-in FaceTime cameras capable of sending 720p HD, as does the iPhone 4. Older Macs with iSight camera's top out at VGA resolution, but the widescreen aspect ratio only in FaceTime helps.
The other big reason to switch the family over to FaceTime is so they can receive FaceTime calls from iPhone 4, iPod touch, or iPad 2. This came in very handy today since I had taken the time to get my parents to buy FaceTime on their iMac a few days ago. This allowed me to FaceTime to my parents from the hospital room of my wife's father. It sounds like a commercial, but it happened & was great. Thanks Pocono Medial Center for the open WiFi.
About the only gripe I have for FaceTime is that when calling Mac to Mac, the app starts the video call in portrait orientation instead of landscape. A widescreen device that can't have it's orientation changed should of course start in landscape.