CamTwist is a free application for Mac OS X 10.4+ that lets you either add video effects to a physical webcam or simulate a webcam so that you can show your desktop, a movie, or pictures. It currently works in Stickam, Yahoo Messenger, aMSN, Skype, and Ustream -- but not iChat.

You can use CamTwist by running the app, then opening your chosen service (like Stickam). Choose your desired source and any effects (flames, bubbles, snow, etc), and CamTwist should stream the combined output to the service.

If you want to show a Flickr set or a movie, choose the CamTwist camera in Stickam's Flash applet, and choose the respective display source in CamTwist. You could also display your desktop through CamTwist so you'd have an easy way to show your friends that fancy desktop wallpaper you just downloaded.

[Via MacUpdate]