Not sure whether the world needs another HOWTO on how to get Skype working under Linux but I recently had problems getting this working and didn't find clear instructions.
I wanted to try out Skype and needed a webcam. After extensive evaluation of alternatives I bought a Microsoft LifeCam VX-5000 (ie I went into Curry's and noticed they had it on offer!). It connects via USB.
Skype is in the Canonical partner repository. Enable the repository and install the package using your favourite package manager. I use Aptitude so edited /etc/apt/sources.list to include the following entry:
deb http://archive.canonical.com/ubuntu natty partner
I then installed Skype. Start it via the menu and register with Skype.
Enter Skype options (button at bottom left) and select Video Devices. Click on Test and your face should show up. I had no problems getting video working. Now select Sound Devices. Click on Make a test sound. I found that sound was distorted and if I selected Make a test call there was an echo.
The first solution was to assign my user to the pulse and pulse-access groups via System Settings, User Management as described here. Log out/in and my sound distortion was solved.
The next problem was when I made a test call the microphone was not activated. Sound was not picked up and the light on the camera didn't turn on. I found the solution here. It appears that Skype thinks I have two microphones, the one on the webcam and the (non-existant) one on my sound card. It was trying to use the one on the sound card. Although KDE has an option in settings to select which microphone to prefer it appears that this does not work. However, there is a workaround.
First install the pavucontrol package. Now in Skype Sound Devices there should be a Open PulseAudio Volume Control button. Click this and a new window should open. Select the Input Devices tab and the light should come on on the camera and the volume display respond to sound, thus proving your camera works. Now select Configuration tab. The Lifecam profile should be set to Analogue Mono Input. I also have an entry for Internal Audio which was set to Analogue Stereo Duplex. Changing this to Analoge Stereo Output meant that Skype no longer thinks I have two microphones and uses the webcam one as it should.