FaceTime for Mac, which you can download right now, works pretty flawlessly so long as you have entries in your Address Book. Here's how it looks doing Mac to Mac, and Mac to iPhone. There's even iChat comparison.
Overall, it's good. Apple kept the aspect ratio vertical by default when you're doing Mac to Mac FT, but you can toggle landscape manually by doing CMD + R. iPhone to Mac looks worse in terms of frame rate compared to Mac to Mac, but image quality is comparable. That says good things about the camera in the iPhone and not-so-good things about the camera in the iMacs and MacBooks.
You can, however, free up the 15fps limit in iPhone 4's FaceTime by jailbreaking your phone and installing a Cydia app called FaceTime Mod that lets the Framerate wander from 6fps to 30fps, rather than a locked 15. That's better coverage for when you're on 3G and higher potential quality over Wi-Fi.
The only complaint I can think of is that there's no central directory for which email addresses are signed up for FaceTime, or even which friend is online. So you'll have to establish that you're FaceTiming in say, AIM or Gchat, and then FaceTime. A standalone video chat service this is not, but I'm thinking Apple expects you to have FaceTime open all the time so you can get incoming calls from people.
FaceTime looks about the same as iChat from what we see, which has been good enough for video chats for millions of people. I'm surprised Apple made a third-party app for FaceTime instead of just putting iChat into phones and iPods, but I guess it's a setup for porting that FaceTime app to Windows users eventually? Either way, you can download the beta today if you have Snow Leopard. [Apple]
Update: Whoa, you don't even have to have FaceTime open for you to get incoming FaceTime calls! Also, FaceTime automatically pauses your iTunes when you get a call. Neato.