Fixed for now on my n900. Though skype is still not perfect.

Fix involved messing around with Skype files that I had messed with earlier...
sudo rm /etc/skyhost/skypeaudiocodecs.conf
sudo mv /home/user/.Skype /home/user/.Skype.BROKEN
sudo mv /home/user/.Skype.WORKING /home/user/.Skype

If everything was working perfectly I wouldn't have even bothered to mess around with the above files in the first place.