Video: Video Calling on iPhone 4: FaceTime
We got some face time with FaceTime at WWDC for video calling on the iPhone 4. Currently, video calling is limited to WiFi, meaning that you would initiate a call over your carrier’s network and must also be connected to a WiFi hotspot or router to activate FaceTime. Within the app, you can switch between the front and rear cameras to show yourself off or the action around you to your caller, as well as rotate your device seamlessly between portrait and landscape.
Steve Jobs says that there is no set-up required for FaceTime, but both calling parties do need iPhone 4 hardware for the feature to work.