ManyCam is the freeware tool users who need their Webcam for more than one chat program simultaneously. It creates a "virtual" Webcam that replicates your currently installed camera. It then lets multiple applications access the video stream without conflict.
ManyCam is compatible with Yahoo, MSN, CamFrog, PalTalk, ICQ, Skype, YouTube, and more. Once you've installed it, you need to set ManyCam as the primary input for program that you want to use. It'll automatically start when activate your Webcam through that program. The application includes a bunch of gimmicky features that let you change aspects of the background and foreground. You can map a new pair of cartoon eyes over your face, and they track pretty well to your movements, or you can show that your life is hell by replacing the background with flames.
There is an unfortunate toolbar that will install unless you opt out during setup, but other than that, ManyCam is worthy of a Webcam Oscar for cool and useful tech.