As long as you both have access to Wi-Fi, you can video chat with the built-in capabilities of the iPhone 4. From the Apple web site:
One-tap simple.
FaceTime works right out of the box รขโฌโ no need to set up a special account or screen name. And using it is as easy as it gets. Letรขโฌโขs say you want to start a video call with your best friend. Just find her entry in your Contacts and tap the FaceTime button. Or maybe youรขโฌโขre already talking on a voice call with her, iPhone 4 to iPhone 4, and you want to switch to video. Just tap the FaceTime button on the screen. Either way, an invitation pops up on her screen asking if she wants to join you. When she accepts, the video call begins. Itรขโฌโขs all perfectly seamless. And it works in both portrait and landscape modes.