One way to save bandwidth is to use a well-designed compression algorithm optimized for the human visual system. The second way is to just shrink the image, and then "stretch" it back to the original size, which -- in a sense -- is what Skype is doing here. Which is going to be more effective?
It really depends on how much data you need to shave off. Beyond a certain point, you'll get better visual results by reducing image size rather than increasing compression. As an example, an SD movie encoded with H.264 to a file size of 300MB would look a lot better than an HD movie encoded to the same file size, even when played back at the same on-screen dimensions.