Agreed. There is no point to the video call if you're not actually on screen.
Nitpick: A video call can be useful for things other than letting the people see each other's faces. For instance, when I needed to ship a bicycle long-distance, my bike-savvy brother helped me disassemble and pack it (in person), and when it arrived at the other end, we reassembled it "together" over Skype.
It worked great; I moved the laptop so that he could see whatever part of the bike I was working on (or both me and the bike, where possible) and he was able to walk me through reassembling everything we'd disassembled and making all the necessary adjustments. Plus, I could easily chat with him and my mom while having both hands free to work on the bike.
I've had to be on Skype a lot lately as my husband is traveling, and its shortcomings as a communication medium are... glaring. Chats with the sweetie are one thing, but some places are relying on this for cross-country interviews and the like, which I think is potentially problematic! Of course, hopefully in that situation both people would be working with a better internet connection (husband is using a wireless dongle for the most part.)
7. Recognize that normal facial cues and body language are reduced or none; you will be missing a lot of subtext, so conversations tend to be more superficial. The natural conversational flow is very altered. Don't be quick to take offense or get feelings hurt.
Maybe I've just used Skype enough to get used to it, but I wonder whether your problems are really due to Skype or if it's your internet connection and/or webcam/microphone. Barring internet connection issues, when I make a call on Skype, I am pretty much just talking to my computer as if the person on the other end were in the room. The major difference is making sure that the camera is aimed correctly if we're using the video function. I have a good built-in microphone and just speaking to the computer in a normal conversational tone is usually sufficient. We occasionally have to repeat something, but no more than in a normal phone conversation. I'm also not sure how facial cues are reduced when Skyping as long as the person's face is visible on the screen. That's certainly a problem if the video is stalling/freezing/lagging, but that's a problem with the connection, not an inherent problem with the medium. Besides, most people are quite accustomed to phone conversations; Skype offers a lot more facial cues and body language than that.
Skype isn't perfect, but don't be too quick to write it off. It can be very nice when you have a good connection and good equipment. I'll sometimes use Skype to call actual phones when I expect a long chat, just because I find it more pleasant than using my cell phone for that long. If you're having problems with either the sound or the video, I'd try turning off the video and just having a voice chat. If the problem is a slow internet connection, then using video can make the sound quality suffer, too.