Use PiP to show the picture from any webcam on your screen, nicely integrated as "Picture in Picture". Define a keyboard shortcut to smoothly fade in and out the video during a live presentation or while recording a screencast. PiP doesn't clutter the dock with it's icon: After launching it'll automatically install a small icon in the menubar.
Updated on Sep 12 2016
Note: Now requires OS X 10.10 or later running on a 64-bit Intel processor