ALL IS CLEAR - FEEL FREE TO UPDATE!
It turns-out it was Coincidental... it was NOT the 1.0.3 update that did it... it was a Yahoo Server-side thingy that prevented ALL iSight users for several hours... but it has been resolved.
Other Yahoo/iSight users that didn't update woke-up this morning to no video connection also.
I do not know the EXACT nature of the snafu... but it appears to be fixed now. Works for them, and myself too. Have fun!
BTW - I don't notice a damned difference. :o)