There seems to be a problem with the latest version of Skype and Windows Vista.
The program starts and appears to operate normally, but when making a call, incoming audio does not function correctly. When calling the 'Sound Test Service' contact, audio works for a few brief seconds but then cuts out.
After looking at two Windows Vista computers (a laptop and a desktop with different sound chips), I concluded that the only way to resolve the problem was to downgrade the version of Skype to one that still worked OK.
Fortunately, 'oldversion.com' still has a copy of Skype 18.104.22.168 available, and this works with the audio:
I was able to uninstall the newest version using 'Programs and Features' in Control Panel, then reinstall 22.214.171.124 using the above link. I then disabled automatic updates within Skype (Tools - Options - Advanced - Turn off automatic updates - Save) to prevent the same problem occurring.