Skype just released a major update to its iOS application. Now, users of Skype for iPhone can make video calls to other Skype fans over Wi-Fi or 3G. This is amazing, especially since Apple’s FaceTime video calling service is limited to Wi-Fi only.

However, is Skype’s mobile video calling service any good? Does it work as well over 3G as it does over Wi-Fi? Fortunately for you, we’ve already spent some time with the updated app, and have a full “hands on” report for you to check out.

First, let’s take a look at the app’s added features. As mentioned, version 3.0 of Skype for iPhone allows users to make video calls over Wi-Fi and 3G. However, this video calling service isn’t just limited to iPhones. Skype fans can make calls between iPhones, iPod touches, iPads, and computers.

Making calls between iPhones

Making Skype calls on your iPhone using the app is easy. Simply select a contact, then touch either “call,” “video chat,” or “chat.” As long as you’re connected to a Wi-Fi or 3G network, you’ll be able to initiate a video call within the application.

Unfortunately, even when connected to a wireless network, the quality of mobile video calls in this app does not match FaceTime. However, you can make calls on the go (over 3G), and contact your Skype pals using the app. For a comparison between Skype for iPhone and FaceTime, check out the screenshots of my Skype for iPhone and FaceTime video call to Alexander.

As you can see, FaceTime is certainly the better of the two, offering a higher quality service. When using Skype for iPhone to make video calls over a 3G network, the results are more blurry.

The ability to make calls over a 3G network is great, even if the image is blurry. As you can see in the above screenshot, I’m pretty much in the middle of England’s countryside – so my 3G signal wasn’t all that strong. Ideally, you’ll want to make iPhone to iPhone Skype calls over a Wi-Fi network. Even better of course, would be to use FaceTime, instead.

One more thing worth noting, is the effect video calling over 3G will have on your data allowance. Apparently, video calling will use up between 3 and 4MB per minute, when making calls over a 3G network. So beware!

Making calls between an iPhone and a computer

One of the best features of Skype for iPhone is its ability to call other Skype users, whether they’re using the service on an iPhone, PC, or Mac. While FaceTime for Mac is available, it is obviously available for Mac OS X users only. Now, iPhone owners can call any desktop, regardless of the OS, so long as Skype is installed.

The quality of the Skype call obviously depends on the iPhone owner, and whether the device involved is connected to the Internet via Wi-Fi, or 3G. As you can see in the image below, calls made over 3G are just as blurry.

However, like I said: it’s great that Skype fans can make calls to a desktop computer from their iPhone. Hopefully, in time, FaceTime will be available in a Windows version. Until then, Skype is going to be the next best thing.

If you haven’t already downloaded Skype for iPhone‘s latest update, be sure to do so when you get a chance. It’s definitely a great update, and one Skype fans will much appreciate. While the quality of video calls doesn’t quite match FaceTime, I for one am not complaining.