Ironically independent of the Google speculation and rumors, I found myself today firing up Skype for the first time since October. I had a call with someone in Europe and have found that a lot of the Europeans I interact with use Skype.
There were some strange echoes and noises periodically but generally it felt like an in stereo conversation. And it was free.
Right after that I had a call with another friend in the UK, who hasn't installed Skype yet. We hadn't talked in a couple of weeks so we spent a good amount of time chatting on my Vonage line for pennies a minute.
These calls were either free, or really cheap and the quality was more than acceptable. I would hate to be a fixed line carrier today.