The most critical of the usability fixes is that "interrupt" events, such as an incoming call or calendar notification, will no longer end an in progress Skype call. In addition instant messages that have not been successfully sent now show a "pending" indicator, making it clear whether a message has got through or not. Also included in the new release are a number of generic fixes, which fixes various crashes and memory leaks.
There are still a number of known issues with the app, which are fully detailed on the Skype Blog. In addition the platform limitations means that the Skype app must be open for you to receive calls and new instant messages (i.e. no background / multi-tasking support). This will not change until the release of Windows Phone 8, which includes support for background VoIP calls and integration with the main phone app / calling experience.
Skype can be downloaded from the Windows Phone Marketplace for free. If you arleady have the app installed you will be prompted to install the update via the Marketplace updates functionality.