Editors' note: This review has been updated to reflect improvements and fixes in the version released October 7, 2013.
Skype for iPhone lets you send texts and make both voice and video calls, and has a nice-looking interface. Unfortunately, it's missing a key feature, and I found that a bug makes the app unusable under certain circumstances.
Updated for iOS 7, the most recent version of Skype looks great, with a home screen that lets you view your contacts and gives you buttons across the bottom of the interface for navigation. Interface elements have all been simplified to fit in with the iOS 7 aesthetic and they are just as easy to navigate as before. You can add contacts through the Skype directory, save a phone number directly, or import numbers from your iPhone contact list. Besides contacts, you also have buttons across the bottom for Messages (IMs); a dial pad for calling phones; and a My Info button where you can add a photo, check your Skype credit status, listen to voice messages, and turn on call forwarding.
One of the greatest things about Skype is that you can make video or regular calls to other Skype users. As long as you have a connection and your friend has the Skype app on mobile or desktop, you can make free video or regular calls to him anywhere in the world. You'll only run into trouble if you want to call landlines or friends with mobile phones who do not use Skype. Obviously the best solution is for your friends to download the app, but if that's not possible on their devices, you can sign up for a subscription or purchase Skype Credit. The subscription prices are very reasonable at the time of this writing (here is the pricing page), with unlimited calls to landlines and mobile phones in the US and Canada for only $2.99 per month. To get the same deal to anywhere in the world, it costs $13.99 per month.
If you don't want to sign up for a subscription, Skype Credit lets you pay as you go, charging 2.3 cents per minute. Obviously the subscriptions are a better deal, but it's nice to have another option, especially if you want to test if the service is right for you and your friends.
The other main reason to use Skype is for free video calls and the feature works nicely. I was able to initiate a video call with a friend, and even could receive a regular phone call without losing the Skype video call (a problem I had had in previous versions). I could switch cameras (something the Android app cannot do) and, a new feature called video messages let me record a quick video and send it to any recipient. I'm happy to see the video features finally got an upgrade, and I can see how the video messages feature could be both fun and useful.
I found only one missing feature during my testing of the iOS version of the app that is available on both Android and Windows Phone. When using Messages, you are only able to send messages to one other user; you cannot send a message to a group (something you can do easily in the included Messages app for iOS). But using an Android or Windows phone, we were able to start a group chat with my iPhone, and I was able to participate -- I just couldn't initiate one myself. This is a feature I complained about in a version released late in 2012, but it's still not available for iOS at the time of this review.
Even though it is lacking group chat features, for sending messages, video, video messages, and voice calls, the Skype app has definitely improved over previous versions. The new look of the app brings it up to speed with the design of iOS 7 and fixes annoying bugs I found in earlier versions.