As Micheal points out the Firmware needs to be updated to the last one (1.0.3)
It is needed as this is an Audio Update to the camera and effects many apps that Apple Supply with the OS.
The Update is in earlier OS versions and is Triggered by running Software Update.
The File is in the Hard drive/System/Library/CoreServices/iSight Updater
However it is not present in Snow Leopard (I am not sure about Leopard as I am away from my G4 today)
If you have a computer with this folder you can run the updater manually.
It is an Update that will only run on an OS that can run PCC or Universal written software (not Intel only)
Please, if posting Logs, do not post any Log info after the line "Binary Images for iChat"
G4/1GhzDual MDD (Leopard 10.5.8)
MacBookPro 2Gb( 10.6.8)
Mac OS X (10.6.8),
iMac OS X 10.8.3
"Limit the Logs to the Bits above Binary Images." No, Seriously
Ok after messing with it for another half day, I figured it out.
10.8.3 had some updates to audio of some sort. It stops the mic from working in Photobooth and messes up Skype for me (sound cuts in and out).
I tried repairing disk permission, but this didn't fix the problem.
I eventually put 10.8.2 back on and everything is happy now.