Have you guys checked out PingChat?
Free text/audio/video/images to iPhone, Android and Blackberry users. Get your friends signed up and save a fortune on SMS/MMS bills! Also supports group chat (I haven't tried that yet)
It gets even better - the Android version is better than the iPhone version because it allows you to sign up using your phone number and/or and a Ping ID, so people can find you with either one. It also allows you to link your PingChat contacts with your address book, so it displays people's names instead of their Ping IDs.