I've used skype as my only instant messenger and telephone for three years now, and I cannot say enough good things about it. I've always found it to be reliable and the chat logs were even helpful when I did my visa application. Usually when people have call quality issues, it's because their connection is lousy - not because Skype is. For sound issues, people should check their headset quality. It's not really very good if you're shouting into a webcam, but nothing is.
Also, with Skype in and Skype out, you can actually set up a "local" phone number for your family at home, so they can use a regular phone to ring your computer overseas without paying long distance charges. That's pretty cool.