2. You need the ov51x-jpeg module from here. The version in the Hardy repository (1.5.4) is too old, so instead download the latest source code.
3. Unpack the tarball (rightclick and choose "extract here")
4. open a terminal and type cd ov51x-jpeg-1.5.8 (or whatever the latest version is)
5. compile with "make" and "sudo make install". You will probably need kernel headers etc. etc. installed. An easy way to get this stuff is to install "module-assistant" from the repository and then on the command line type "sudo module-assistant prepare". That should set you up nicely.
6. Once installed type "sudo modprobe ov51x-jpeg". (If that doesn't work, do "find /lib -name 'ov51x'" and use the resulting filename (ending in .ko) for "sudo insmod
7. To make Skype work you may need to do "sudo modprobe ov51x-jpeg forceblock=1".
8. After this cheese, Skype etc. should recognize your webcam.
Good luck... it "only" took me 2 hours or so.... (/me wonders why he can't be satisfied with Windows)
(NB: on the plus side, the picture quality seems to be much better under Linux. I don't know why, maybe I need to change a Windows option or something....)