Just happened to be awake the hour the Skype application became available and gave it a pretty good testing.

Over WiFi, audio calls sound great. Used it with both the iPhone headset and just as a handset and callers said the quality was good - good as Skype calls are normally.

The interface is easy and everything seems to work.

I can't imagine you can use it as an effective incoming phone, unless you *know* you are about to get a call. The Apple SDK doesn't really allow for applications to run in the background, so if you phone goes to sleep you may not be able to take a SkypeIn call, but I'm just guessing.

All in all, a great application and makes the iPhone worth keeping in your carry-on when traveling overseas, at least for outbound calls.