Disabling skype -> options -> sound devices -> 'Allow Skype to automatically adjust my mixer levels' fixed my skype installation - latest skype, 12.04.3 LTS server + xfce4.
Disabling skype -> options -> sound devices -> 'Allow Skype to automatically adjust my mixer levels' fixed my skype installation - latest skype, 12.04.3 LTS server + xfce4.