Spotted on the Connectix web site: "The QuickCam 2.1a updater will not update previous versions of the QuickCam software if you are using Mac OS version 7.6. It will update properly if you are using Mac OS 7.5.5 or earlier. Connectix is working on the problem and will post a new updater to online services shortly." (Thanks Kurt Christensen, Version Tracker.)
On a related note, I received a report that claimed that connecting the QuickCam to the modem port solved certain problems that occurred when it was connected to printer port.