The Touchmods team have released version 1.0 of SIP-VoIP for the iPod Touch. This hack will allow the Touch to make phone calls over its WiFi connection. Although named version 1.0, it is most certainly still a beta, and will take some special magic on your part to get things going.

The Touchmodders are giving away the software and hope to make money on their iPod Touch microphone, without which you’ll be having a very one-sided conversation.

Installation is easy if your iPod Touch is already hacked. You’ll need to add the Touchmod team’s server to the Installer’s source list (http://touchmods.net/rep.xml) before the application will show up.

You’ll then need to get a SIP (Session Initiation Protocol) account. SIP is the open protocol for VoIP. I tried with my Gizmo Project account details with little success, but as you can see in the video, it does work. The application will need some prettying up and a little more user feedback (error messages are absent), but this is shaping up to be a nice little hack.

Project page [Touchmods]