I had this problem with both Skype and Dell Video Chat (DVC). Also with sound recorder. With Skype, at least, I found that if I plugged in an external microphone, I could get sound in. Also, even with the external mike plugged in, the sound was very faint. I learned that the sound control settings panel that you can choose from double clicking the sound icon on the menu does not help much.
To fix, open a terminal window and enter
sudo alsamixer; you will get a pretty GUI with the sound components shown. Navigate to each sound function with the horizontal arrow keys. Then, increase or decrease setting with the up/down arrow keys. In changing the settings, I experienced considerable audio feedback, that is, if the input microphone level or the speaker were set too high, there was a terrible squeal over the speakers. Note that there will be two inputs, the internal mike and the plugged-in mike.
HTH,
--Steve
Ok, I'm using Ubuntu Hardy 8.04 with KDE4 and I've gone through all fixes I've found. But Skype still isn't picking up any sound from my mic. I can hear things just fine, and other programs (Audacity and KRec) find the mic and record sound from the mic. I've been messing with this for over seven hours and it's a bit of a haze for me on what I should or shouldn't add here.