Back in May 2010, the Windows Live team published an update for Windows Live Essentials 2009 (Wave 3). It introduced stability fixes as well as a simplification of the webcam feature. Until now, this Wave 3 update (build number 14.0.8117) was optional. This is going to change soon.
There seems to be some confusion on the update to the webcam feature. When you want to send or view webcam in the recently upgraded Messenger version, you will launch a video call. This is a changed behavior, and people are quite confused about it.