I think it can be a very efficient way of tutoring. It has its upsides like less travel.
However, there are a few frustrations associated with it:
1. When it goes quiet, you don't know whether the connection dropped or if they're working.
2. You don't know if they're working or just being stuck and staring at the page blankly.
3. You can't hit them when they make mistakes if you're teaching them through Skype, unlike in real life.
But sometimes it is quite convenient ie: student can't make it over to your place, or you just need to answer a quick question etc.
(jokes about the last one of course =p)