I am frequently asked for advice about hardware, software and connections for Video IM. I suppose this is a bit like putting the cart before the horse, since I have already written quite a lot about the major Video IM programs, but better late than never... here are some thoughts and recommendations.
The first thing you want to be sure of is that you have sufficient bandwidth - in other words, that your internet connection is fast enough to support the kind of communication you want to do on it. If you want to do video chat, the absolute minimum is 128 kB each for both upload and download speed, and to be honest you probably need a minimum of 256kB in each direction to be comfortable with video chat. Don't even dream about video over a normal dial-up line (56k or less), it just won't happen. If you are willing to limit yourself to audio-only calls, you might be able to get away with a 56k dial-up connection, but even then the audio quality is likely to be sub-optimal.
Of course, the various kinds of broadband internet connections seem to give their speeds in all sorts of confusing ways, depending on whether they are DSL, ADSL, cable or whatever, so you might want to go to one of the internet speed measuring sites, and simply let it test your connection and tell you what the speed is. For basic upload/download speed testing, I generally use Speedtest.net (http://www.speedtest.net), and for a more specific VoIP test and analysis, I use MySpeed Server VoIP (http://myvoipspeed.visualware.com/it/index.html), which tests several areas that are important to VoIP call quality, and gives you a short analysis of the results at the end. This can be important, because raw speed is not everything! I have tried a variety of connections, including dial-up, ISDN, cellular (GPRS, EDGE, UMTS and HSDPA), ADSL, DSL and Cable. I was surprised to find that even though the cellular connections looked like they were fast enough for voice at the low end (GPRS and EDGE), and video at the high end (UMTS and HSDPA), I was never able to get any sort of decent call, not even audio-only when I was using the highest speed cellular connection. Then I ran the MySpeed tests on it, and found that the Quality of Service and Packet Loss were both far short of what is necessary for reliable VoIP connection. The moral is, if the analysis says that your connection might have problems with VoIP call quality, believe it! Try to either work out whatever problem there might be with your ISP, or get a better/different connection to support your video chat.
The next thing to consider is the webcam, of course. My advice on this is always the same - don't get carried away until you get a chance to see how it is all going to work. I don't think there is any sense in going out and buying a fancy, expensive webcam when you haven't even made your first video call yet! It might not work for you, or your contacts might have slow internet connections and won't be able to tell the difference between your fancy cam and a simple inexpensive one, or you might just decide that you don't like being on camera. My friend Grant in the U.K. is a good example, he decided to give video chat a try, so he bought a very simple webcam that he said cost something like 16 pounds. When we were testing over the weekend, his video was perfectly adequate - clear, bright, good resolution and frame rate.
I also advise people NOT to buy a webcam with a built-in microphone, if they have a choice, and even if they do get one with a mic, don't plan to use it for video calls. Webcam microphones are infamous for having poor sound quality, picking up lots of echo and ambient noise, and in far too many cases actually causing technical problems with the chat, or even the whole computer. The best buy for a user just starting out with video chat is one of the low-priced webcams with a separate headset included.
That leads us to the next thing to consider - audio input and output, or microphone and speakers. As I have just mentioned, I am a bit contrarian about this. I advise people not to use webcam built-in microphones. I believe that the best solution is a headset, because they generally pick up the best quality sound from the microphone, and they eliminate virtually all echo and feedback from the speakers. I prefer one that plugs into the microphone/speaker jacks on laptop computers, or on the sound card or front panel of desktop computers, because they keep things nice and simple - your sound drivers are loaded already anyway, so no additional software or drivers are necessary. USB headsets are just as good for audio quality, but they require their own drivers, even if it is only the generic Microsoft "USB Audio Device" drivers, and that is one more opportunity for trouble. I also don't recommend use of laptop built-in microphones, first for the same reasons as webcam built-ins, but also because laptop microphones often pick up electrical noise from adjacent components and wiring. I know that software compensation such as AEC and AGC are supposed to eliminate, or at least reduce, echo and feedback problems, but they have a long and sordid history of problems - Logitech has had so many problems that they include an AEC removal tool with their software distribution, and Skype had so many problems with their AEC and AGC that the first thing I ever learned to control by editing their config.xml file was those two "features". If you can eliminate potential problems like these by doing something as simple as using a headset, then why not do that?
The last thing I recommend that people consider is the environment in which they will be making their video calls. It should be well lit, preferably with natural light but if not sunlight then at least make sure there is enough artificial light available. Also, pay attention to the source of the light - you don't want a bright light source directly behind you, as it will make you and everything else in the picture very dark. My brother moved his camera slightly this weekend to get away from a large window that had been directly behind him, and we saw for the first time that his sofa has a lot of nice color in it! Finally, try not to have a solid white background behind you in the picture, such as a white wall or such. Not only will it make you appear "washed out" in the picture, it might make you look as if you are standing in a police line-up and should be holding up a number!
If you give a little thought to these things before you start with video IM, you have a good chance that you will be pleased with the results right from the start!