From reviews.cnet.com:

Months after teasing us at CES with an announcement of Skype’s native VoIP client for the iPhone, the free Skype for iPhone will finally be available to download from the iTunes App Store sometime on Tuesday.

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In terms of navigation, Skype’s VoIP app for iPhone looks more like your traditional iPhone app than it does Skype 4.0 for Windows. For many who already prefer Apple’s sleek interface archetype, that’s a triumph, but those who enjoy Skype’s branding may feel disappointed.

Skype’s screens are well organized and use the iPhone’s ability to add filters, for instance, to sort your contacts alphabetically, or by who’s online. There’s chatting as well, though Skype’s flagship feature is its VoIP calling that’s free to other Skype users and an inexpensive per-minute fee to landlines. Calls on Skype for iPhone work only if you’re in range of a Wi-Fi network, so your call quality will in part be at the mercy and strength of wireless networks nearby–calls will not work over the cell phone network on the iPhone (but chatting will.) Assuming your connection is solid, you can dial a number or quickly call a contacts stored in your address book. iPod Touch users will need earphones with an embedded mic to talk. During a call, you can mute the line, go on hold, or put the call on speakerphone. In the My Info window, you can follow a link to buy more SkypeOut credit online.

Taking a photo from within Skype to serve as your avatar image, or pulling a picture in from the camera roll are two iPhone-only features that makes use of the phone’s hardware attributes. Another imperfect, but still neat, feature is the ability to accept incoming conference calls. While you won’t be able to initiate a call, we’re told, you will be able to jump on one if a buddy invites you in. We hope the next version includes placing conference calls from the iPhone.

So while Skype for iPhone won’t replace your regular calling plan while you’re on the go, you will be able to use a WiFi connection in place of using your AT&T minutes.