Correct me if I'm wrong but it can only record your input, not the other side of the conversation - if you change the setting to record from stereo then the person you're talking to on Skype just hears themselves echoing back.

My personal use for audacity other than randomly playing around with audio stuff was to clean up a CD of a radio recording from a decade ago, that over time had picked up scratches and noise, and managed to do a pretty awesome job overall.