I started using it when my parents wanted to talk with my kids when I was living overseas. The webcam was decent. The connection whacked out every once in a while, but for something that was free, I couldn't beat it.
I got a $25/mo for high-speed cable internet deal when we moved back the the US and bought our house a couple years ago. I never got phone service ($60+ a month) from the phone company. Instead, I'm using Skype.
I bought a local number (skype-in) for $60 for the year and pay $5 a month for US/Canada/Mexico unlimited calling + voicemail. You can get a number from basically anywhere in the world.
I paid about $100 for a linksys phone that connects to my high-speed cable modem.
Quality is outstanding. I have to reconnect the phone once in a while when the broadband modem hiccups. I also like the fact that I can check and listen to my voicemail from anywhere.
There's no 911 service, though.