Skype's free calling and texting service works on the iPad, but with limitations. At the time of publication, Skype has not released an iPad-optimized app, so you must use the iPhone app for your iPad. Due to differences in screen resolution between the iPhone and iPad, any images in Skype may appear small or distorted on your iPad, as they were designed for an iPhone screen.
Skype video calling is only available on the iPad 2, not the first-generation iPad. The original iPad has no camera, so even if you connect a video-capable camera to your first-generation iPad through Apple's camera connection kit, the software on the iPad may not support the image transfer through Skype. On the iPad 2, however, you can use both the front and rear video cameras with the iPhone Skype app.
Both generations of iPad support voice over Internet protocol, or VoIP, technology, so you can make voice-only calls from any iPad running the Skype app with an adequate Internet connection. Skype offers different levels of free vs. paid calling through this method, so you need to check your Skype account terms to see if you can make the calls you want to make.
Text-based Skype chats are possible on both iPad generations. You don't even necessarily need the Skype app if you already have a Skype account. Many iPad-optimized chat apps allow you to sign in to multiple accounts for live text chatting, so look for a chat app that supports Skype account sign-in if you want this service on a screen optimized for your iPad.
To use any of Skype's services, you need a high-speed, strong Internet connection. The 3G connection on your iPad may not support video or phone calls, depending on the service. For best results, only try to video or voice call when you are on a Wi-Fi connection with a good, consistent signal. If you still don't get the video quality you want from Skype video on your iPad 2, try Apple's FaceTime app, which offers video calling optimized for the iPad screen.