There are three main carriers: Airtel, Reliance, and Vodaphone. I would pick the one that has the best coverage in the area you're going to be traveling in the most.

You can now buy cell phone service by the second, not the minute. For my service, local calls are 1 paise (1/100th of a rupee) per second, so, rs .6 per minute. Calls to the US are around rs 15 per minute - roughly 30 cents. Quite an improvement over the $2.49 ATT is charging me.

I do try to Skype for longer calls, but for when I am away from the laptop, the local SIM card is the way to go. It's invaluable for coordinating with drivers, etc.

Truly