I've been using Skype perfectly fine with my Creative X-Fi XtremeMusic and my Logitech QuickCam for over 6 months now.
Now, randomly, the only thing Skype sees is "pulseaudio server (local)". My mic doesn't work, but I can still hear the other person and all Skype sounds... sometimes. It will randomly cut out between 5 and 15 minutes into any given call.
Sound works fine in every other program. kmix sees my sound card and my mic. I can't adjust levels on my mic though, which is weird.

I'm using Sabayon 4.2 with KDE 4.2, xfi-drivers from portage, and the latest version of Skype, 2.1.0.47.

What happened? Is there anything else I can do to help troubleshoot this?

the issue you have is nothing new - you have to read the threads about pulse audio configuration issues etc.

If you stick to pulse audio then your audio settings should be done at pulse audio subsystem level.

regards

Just to add that, presumably some other program is invoking the PA soundserver, perhaps by using ESD sound API. This goes to the issue of whether you can disable, or kill PA.
You could've noticed the similarities with "Skype does not detect mic" which addresses that part of your concerns.
I don't know, but possibly the call dropping out requires adjustments to /etc/pulse/daemon.conf - as many guides to system PA setup involve. They go through unmuting often too. Upgrading to PA 0.9.15+ would be recommended too.
Maybe if you disable Options:Audio Settings: ~Let skype auto-adjust volume, it will let you control mic level.

HTH