here's my effort
www.youtube.com/TimeForATwang
The later videos are better quality, the earlier ones are set to very low res on the webcam.
I spent about 10 mins setting everything up and put no effort into it at all - the video is a Microsoft 1.3MP webcam. For sound I have a Tascam MP1 which takes a guitar input and lets you play along with MP3. The output of that goes to a headphone splitter cable from Maplin so I can plug in the Tascam to the PC and monitor thru headphones.
The thing to figure out is how you are going to monitor the sound - you can't do it from the PC headphone output as there will be a delay.
Good luck!