|Oh it's getting better and better!|
This is certainly not limited within Android device to another Android device actually, even if the user at the other-and uses a Google talk account via their personal computer (no matter what the installed OS is)... as long as the conversion is between Google talk to Google talk, you'll be able to video chat!.
This is actually interesting that Skype has been dominating the VOIP market from the start. But it could change in the future if Google comes up with things like this once in a while. Anyhow, you'll be able to start your Google Video chat via the Android phone, a button will appear next to the people in your Google Talk friends list, simply click on that button and you're on!.
This feature will be available first with the Nexus S + within the next upcoming weeks, when the Android 2.3.4 version hits the downloads it'll be embedded into it. Also for Android 2.3 version this will be available in the near future as well.
Below is the introduction video from one of the members from Google's mobile team. More information concerning this feature is available from the Google mobile web site.