I was pretty skeptical that it would work, but Skype runs pretty great on the iPhone.

Today when we were out and about we went to a mall that had a Barnes and Noble / Starbucks. We jumped on their wi-fi connection, logged into Skype and my wife was able to have about a 10 minute conversation with her Mom in Europe. All free.

The app looks great too. Calling looks just like making a call on the phone. It is a real nice UI.