Voice Over IP (VOIP) is a technology that allows you to use the internet to carry telephonic conversations. This bypasses the normal telecommunications channels and so reduces the cost of communication to the cost of your internet connectivity. Companies supplying VOIP to conventional connectivity include SKYPE, Vonage, etc.
Much cheaper (If you have an internet connection)
Easy to conference call (more than two people)
Often better quality sound
Can allow video
Requires a stable internet connection
Requires power (standard telephone line use their own power system)
See:
http://computer.howstuffworks.com/ip-telephony.htm