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Currently, only a few handsets are supported.

Widespread 3G and cheap Wi-Fi routers have made video calling popular. This has helped applications such as Fringget millions of users in very little time. To catch up with the competition, Skype has now released its version 2.0, capable of video chat for Android.

Right now, Skype 2.0 will only work on Android 2.3 (Gingerbread) devices with front-facing cameras. The list of compatible devices includes the HTC Desire S, Sony Ericsson Xperia neo, Sony Ericsson Xperia pro, and the Google Nexus S. The company is also working on a plan to cover devices that have currently been left out. The application will work with Wi-Fi as well as 3G. It reportedly supports PC-to-mobile calls, which gives it an edge over the competition. According to Skype, the app also features a completely revamped UI.
If you happen to have a Gingerbread device, download Skype 2.0 here. Otherwise, check out the following video.