When I first installed Skype v3.8 for Vista, the other party can hear & see me, but I can only see them but can't hear the other party. After several weeks of trying to change audio setting here and there - even suggested by other entry in forum - audio setting on skype (speakers, mic,etc) or sound setting from control panel, calling echo123 etc - nothing worked. In the end, I installed V4 & asked the other party (who apparently run on V3.8 on Vista as well) to uninstal & try V4, and it now works! Both parties can now see & hear each other, only when both run using V4 beta on Vista.
BUT there are still intermittent dropped video calls which need to be resolved.