Er, update - it just fixed itself... I changed the sound settings (microphone + volume) from Windows default device to something else and then back... that may have helped, I don't know! – WikisNov 13 '10 at 13:57
sometimes skype acts up with sound drivers, you should reinstall them if you face any trouble. – rzlinesNov 13 '10 at 14:57
@rzlines - thanks; funny then that it started working again. Weird. – WikisNov 13 '10 at 15:21