To the people who are complaining about the picture quality: This could very well be an issue of difference of opinion, rather than system setup.
Do I consider the picture grainy? Not remotely. Does it look like a high-quality shot from a 35mm camera? Not remotely. It looks to me like a Web cam pic. Of the half dozen Web cams I've used or owned, it's far and away the highest quality. But it still looks like a Web cam pic.
My cam works great in low lighting. In fact, with just the light from the monitor, you can still get a fairly decent picture out of it (though everything is tinted blue...)
I think the bottom line is that if you've upgraded the drivers, and you're using the latest drivers for your video card, this camera probably looks as good as it's going to look for you. If you can't live with it for $24, you should return it. But a warning: I've got an Intel PRO PC cam, and a $129 IBM Web cam, and I can say with certainty that this one blows them away. The Intel PRO is an excellent cam, and the picture quality is about the same, but I definitely get more frames per second with the kodak.