I'm sure everyone has written about this... Might as well help to ensure that people can quickly find a solution.

env LD_PRELOAD=/usr/lib/libv4l/v4l1compat.so skype

Place that in your launch icon for Skype.  Or drop the 'env' and run it from the command line.  You should drop into Skype's option dialog->Video and test.  Hopefully you now have shiny video in Skype