Just had a new IP phone delivered to me today which looks cool. I have only ever used Skype before. This phone connects on to the network here direct in to our FastIron II switch and then gets a number on our phone network in the office over in the US. The model is an Avaya 4621SW IP and I have yet to use it.

How exactly do they work Matthew?

Saw an ad on TV yesterday, it has a line rental and I think the calls were free.
I only took a quick look at the site but not sure what it said.

I dont even know about Skype either.
Do either have totally free calls, so its just done over broadband?

This one is connected to our network in the office and goes over our internal network over to America and is assigned an extension and regular number for our USA office along with voice mail. Also I will be getting the software version so I can connect over VPN and make calls out bound from the US office rather then the UK office where I am. It's all our own VOIP hardware which integrates with our office phones seamlesly. Anyone calling me on the IP phone will not know the difference as it works just like I was plugging my phone in to their phone network.

Vonage offer a service where you can connect to an internet connection any where and make calls to landlines for free I believe. Not sure on the rental of that per month. They offer a few different options here similar to mobile phone offers in the UK like xx amount of free minutes here and there.

Skype needs to run software on the PC/Laptop to work and uses P2P I believe to work. Calls from Skype to Skype are free and then you can buy credit for SkypeOut where you get different charges for dialling out to landlines/mobiles.

Skype also offers SkypeIn and you have a number of phone numbers in different countries that you can have your own number for. One example of the use here is that you could run a support setup over Skype and display a number in the UK, USA, France and have them all route to your desktop where ever you are connected in the world.