Recently got the phone and Skype with video works fine - both on WiFi and 3G . Using Skype from Market.
Really? Must have been an update because the one from a couple of months ago most certainly did NOT.
I kind of like the modified version, though- it offers some nifty features like the ability to actually EXIT the app (not sign out or send to background, but actually close and remove from memory), as well as some camera quality tweaks.
I'm wondering if the native app has better image quality, however, as the modified version needs to use some sort of overlay mode which I think causes some sort of brightness/gamma shift.