If the flashing green indicator light does not prevent quality video connections, I don't think anything is wrong.
However, if you want to try to stop the flashing, use the suggestions in http://support.apple.com/kb/HT2090 to verify whether this is a Skype only problem not related only to your normal user account.
If the flashing also occurs when using Apple software, contact Apple for service on your Mac.
If yours is a Skype only problem, if the problem continues after you restart your Mac, reinstall the latest Skype version that is compatible with your Mac OS.
If that does not help, Skype's comprehensive support system should best be able to help you use their product with your system.