EK - Yes, you can do that with MSN or Skype - both free.
But the main thrust of Skype is that the person at the other end doesn't have to have a computer, just a phone line. (My dear Mum is getting a bit long in the tooth to work either Skype or MSN!)
As for the cost - cost me about 50 cents yesterday for a half-hour chat with my daughter - not much eh! (Her MSN isn't working, and she's waiting for The Old Man to come visit next vacation so I can fix it for her!)