Facetime by Apple
Whilst on a standard voice call to another iPhone 4 user simply click on the "FaceTime" button or find the contact and click "FaceTime" and prepare to be amazed, well as long as you both have access to Wireless Internet.
I've used FaceTime a few times now and the more I use it the more I seem to be impressed by the quality of the video and even the video/audio sync, don't get me wrong, FaceTime is by no means amazing quality but it's more than enough for a video chat.
What I like about FaceTime is that, not only is it free as it currently only runs over the wireless network, it is global so any 2 people anywhere in the world can now video chat for free on their phone without a computer.
I remember watching Steve Jobs iPhone 4 keynote where he pledged to make FaceTime an open standard allowing other companies to develop around it and I welcome the day when FaceTime will be integrated into iPads, iPod Touch's, non Apple Mobile Phones and even home landlines.
If you've got an iPhone 4 and not yet had a chance to use FaceTime, go do it!