While video calling has already been done by quite a number of apps on Android, it hasn’t been integrated this well. For example, if you’d like to check something while you’re in a conversation with someone, you can return to your home screen or check another app without having to end the video call. The video streaming will pause, but audio will continue. Any text messages entered during the video chat will be shown as an overlay on top of the video conversation, so you can still click on links and read text while chatting.
The updated version of Google Talk will be part of the Android 2.3.4 update that will be rolling out over the air for Nexus S phones in the next few weeks and other Android 2.3 devices in the future. Watch a video demonstration of how Google Talk video works: