Skype has launched a new version of its VoIP software adding video and a Microsoft Outlook toolbar.

The long-promised "2.0" edition was launched today by Skype, which was acquired last month by Internet auctioneer eBay for $2.6 billion.

The main new feature of the software application is the addition of Skype Video that includes a window to view what you look like to the person you are calling.

“At Skype we want to make talking over the Internet the most natural, simple thing for people all over the world to do. With the release of our new software, it's never been easier for people to talk to one another for free, and now they can see each other with video as well,” said Niklas Zennström, CEO of Skype.

The company has also added a Skype toolbar for Microsoft Outlook so users can do one-click calling to contacts from their Microsoft Outlook address book.

Further enhancements include a simplified user interface and Self-expression mode which allows you to broadcast your mood along with your online presence.

Even more useful is a new feature that will show you your contacts' time zone to save you phoning in the middle of the night and waking them up.

Skype also announced a partnership with Logitech to jointly market Skype video and offer select Skype-certified Webcams. The agreement adds to the collaboration with Creative.

Along with the new launch Creative has launched The Creative WebCam Instant Skype Edition. This Skype-certified WebCam features an advanced CMOS sensor that can capture video at 352x288 at a full 30 frames per second.

The launch comes two weeks after Sony Corp. announced a Skype-like free Internet phone service with an emphasis on video conferencing.