The iPhone version of Skype works on both the iPad 1 and 2. It can display the same size as on the iPhone (1X), or it can be expanded 2X to almost fill the iPad screen. The pictures are sharper at 1X, but not bad expanded.
On the iPad 1, you can make a video call. You can see the other party, but they can't see you because there is no camera on the iPad 1!