It works like a charm with Ubuntu 7.10 RC1, Vista was wiped off the disk 15 minutes later after i came home with a new laptop.
Few tweaks i had to do.
1) Install manually new alsa sound driver (extremly easy, i was just following official documentation). Alsa's version 1.0.15rc3
2) After installation of gstreamer-good media codecs, my webcamera works fine too.
Here is the command to check it out:
$ gst-launch-0.10 v4l2src queue-size=2 ! ffmpegcolorspace ! ximagesink