My initial reactions to using Skype on the iPhone:

• The sound quality is about the same as using the AT&T 3G network. Not as clear as Skype is on the desktop. Better than using Skype through Fring. I was hoping for desktop sound quality, but oh well.
• Not being able to run programs in the background, Skype will only work when the program is activated. Therefore it can’t work as an alternate phone line.
• Chat is saved on the Skype server. If you lookup your chat history on your desktop Skype, the chat through the iPhone will be there as well.
• There’s no shortcuts for smileys on iPhone Skype. You’ll just have to remember the shortcuts to use your favorite emoticons.
• There’s no sound effect to notify you of new chat messages. You’ll just have to look at the screen to see the chat count. This isn’t so bad since you have to keep Skype open anyways to chat, but kind of annoying this behavior forces you to check your screen every few seconds if you’re engaged in a chat with a buddy.

Oh well, not bad for version 1. Hopefully with iPhone 3.0 and updates, Skype on iPhone will become even better soon!