If you notice your webcam is upside down on skype/flash but fine on everything else, there’s a good chance the following will solve your problem.
Simply run this command in a terminal, followed by the program you want to run. For example for skype:
export LD_PRELOAD=/usr/lib32/libv4l/v4l1-compat.so
skype
Or
export LD_PRELOAD=/usr/lib32/libv4l/v4l1-compat.so
chromium-browser
Note that the path contains lib32 as both flash and skype are 32bit programs. If you’re actually using a 32bit version of Ubuntu you can modify the path to read: /usr/lib/libv4l/v4l1-compat.so
Update: Name change for 11.04+
If you’re using Ubuntu 11.04 (Natty) or above you need to use the following instead:
export LD_PRELOAD=/usr/lib32/libv4l/v4l1compat.so
skype
Or
export LD_PRELOAD=/usr/lib32/libv4l/v4l1compat.so
chromium-browser