I've found it to be very effective. The video is very helpful. The two teachers I've used have both been very clever at screen sharing, preparing "slides" to show while they are talking, or using Google Docs so that the two of us are editing at the same time. It seems to me to be just as effective as having a live teacher in the room with you.
I find that I get very different things from each of these experiences:
a) Using a textbook, or worksheets, or online quizzes, or tools like Rosetta Stone, or recorded audio lessons--in which one is not interacting with a live human being;
b) Skype videocalls with a paid teacher;
c) Skype videocalls with a language companion.
I learn different things from each. None is a substitute for the others.